General Question

jca's avatar

What do you think about raising the minimum wage to $9 per hour in the US?

Asked by jca (28103 points ) February 16th, 2013

Obama recently advocated for raising the minimum wage to $9.

I am aware that anybody who has to survive on the minimum wage can barely make it, and may very well have to rely on public assistance, i.e. WIC, help with housing (Section 8, or living in a project), Medicaid, etc. However, one of my Conservative coworkers told me that if the minimum wage goes up, no company will be hiring people at anything other than part-time, because they won’t be able to afford paying the minimum. Now of course there will be companies that hire full time workers, but the ones that can get away with it (like many companies do now, I’m thinking of places like Dunkin Donuts and supermarkets, and a lot of stores like Kohl’s where everyone is part time) will only hire part time. That might be an unintended consequence of raising the minimum wage.

What do you think?

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73 Answers

DrBill's avatar

It will not work. It will only be minor help for a small percentage. It will cause employers to cut back on staff to keep from increasing payroll, or raise prices to cover the extra cost. If this is passed it will only serve to further cripple the economy.

JLeslie's avatar

I’m in favor of it. If companies can hire just part timers, then they already are, why would they not do what is economically best for the company anyway? That is what most companies do.

I also am in favor of companies not providing health insurance at all and paying people more and have health coverage either through the government or individuals buying insurance on their own like they do car and home owners. Something has to stop the steamrolling of the private health insurance companies.

CWOTUS's avatar

Keep thinking of “unintended consequences”. No one in Congress seems to like to do that, so we should.

There are a lot of unintended consequences to a mandated increase in the minimum wage. Here are just a few:

1. People (young people, primarily, and most especially young people from inner cities without a lot of opportunity and with no work experience – black kids) will have an ever harder time getting their first job, the one that starts to teach them the basics of working: getting up on time each day, getting to work on time, staying the whole day and putting up with all of the discipline required just to be there and persist. That doesn’t even get into the actual “job training” and advancement that might come later. That first step is tough enough, without having to spend years of effort just trying to get on that step.

2. A lot of the jobs that are on the cusp of being automated, will be. Those jobs will be gone forever. You might say, “Hooray for that! I had that job, and what a drag it was!” Re-read point #1 above.

3. Jobs that can’t be automated / eliminated will be performed by others, overseas.

4. More jobs will go underground, and the people performing them will be uncovered by FICA, Workmen’s Comp, fair employment laws, and won’t be paying income tax.

5. Poverty will increase.

6. Politicians will congratulate each other on the brave stand they took against “the rich”.

tom_g's avatar

@DrBill: “It will cause employers to cut back on staff to keep from increasing payroll, or raise prices to cover the extra cost. If this is passed it will only serve to further cripple the economy.”

Sounds like we have a problem – and it’s called the private sector.

@CWOTUS: “There are a lot of unintended consequences to a mandated increase in the minimum wage.”

Again, so what exactly is it about this “free market” thing that people get all excited about? Oh, most of us put up with all kinds of “unintended consequences” from having labor laws and regulation at all. My 10-year-old daughter, for example, cannot go work at a factory. Companies must meet work health and safety standards. They can’t just dump their waste anywhere they want. All of these things result in companies fleeing to places where these regulations do not exist.

I don’t know what the answer is. I just hear a lot of people who rally for an economic system by pointing out its flaws. “We must keep free-market capitalism from being polluted by even the smallest regulations and environmental protections because free-market capitalism will only work if we’re able to shit on the planet and pay people practically nothing for their work! Go capitalism!”

Note: I realize I don’t know shit about economics. It seems, however, that the rest of the first world, which seems to have embraced more government involvement (universal health care, for example), are doing more than ok.

Ron_C's avatar

I think that everyone that works should have a livable wage. If you have a company that can only survive by hiring cheap labor, your company should not exist.

I really hate the excuse that raising wages will hurt the company’s bottom line while the CEO makes 100 times more than the lowest paid employee. I think that much of today’s CEO salaries would help everyone if the excess was spread among the employees.

bookish1's avatar

The federal government can mandate minimum wage, but it can’t mandate how companies distribute their earnings internally. What company is going to give two shits about their minimum wage employees, and lower the cut that management receives in order to increase minimum wage without reducing new hires/eliminating jobs?

Linda_Owl's avatar

Other countries have minimum wages set this high – so why shouldn’t we have the same thing in the United States? And I agree with @Ron_C , what do the CEOs do to earn the tremendous amounts that they make??

El_Cadejo's avatar

I really have no true understanding of how the economy works so I may be way off base here, but I don’t understand your friends argument. I understand it will be potentially harder for companies to pay employees but I dont see how that will effect hiring. If you need 8 people to run your store and minimum wage goes up its not like you can decide to just run the store with a staff of 4 now…

Coloma's avatar

Many employers are paying under the table wages in this economy right now. I have come across many small biz. owners offering min.wage or slightly higher ( $8.50 ) in weekly cash payments. Minimum wage is a joke, everyone knows it, and while I have no answers, I do know that, at least in my area, a lot of under the table wages are the norm at this time.
Personally, all politics aside I think min. wage should be $10 an hour.

In a perfect world, of course.

ETpro's avatar

While we’re listening to the list of unintended consequences, let’s think as well about intended consequences of keeping the minimum wage so low that people working 40 hours a week for minimum wage are in poverty. Food stamps, Medicaid, state housing assistance. Why are the GOP’s sponsors, big corporations, so quick to raise the scepter of “unintended consequences” of finally catching the minimum wage up to where it was in 1980 and before, when factored for inflation? Because that would transfer the costs of supporting wage slaves from the taxpayers to the corporations benefiting from the labor they currently do partially at taxpayer expense.

No matter how much the right wants to insist it does, magic money doesn’t exist. Paying out of your right pocket costs just as much as paying out of your left pocket. We could repeal the 13th amendment and return to actual slavery. The corporate masters who fund the GOP and who want to pay themselves 520 times as much as their average worker makes would love that. Everyone knows that stratospheric CEO salary increases have NO effect on US corporate competitiveness with trading partners like Japan, where CEO’s earn 11 times what a worker does, or Germany, where CEOs earn 12 x what the worker does. Oh no. CEO pay comes from magic money that doesn’t count. On the other hand, paying a living wage to workers comes from magic money that counts 10 dollars for one.

Clearly, you can pay too little to workers and harm the overall economy, starving the middle class till there are no consumers. You can also pay too much. Setting a minimum was of $0 or $100 would be equally inane. But we can afford a living wage, just as we did in the 1950s through 1980, a time when the US prospered and GDP grew at an unprecedented pace. The slave owners who claimed that ending slavery would destroy all US agriculture were, simply put, flat wrong. The US is still the biggest agricultural exporter in the world.

SuperMouse's avatar

I happen to be spending the day working on the reference desk at a university library so I decided to use the multitude of databases available to me and do a little research. What I have gathered from reading several abstracts and a couple of entire articles is that while raising the minimum wage will not create the apocalyptic unemployment scenario predicted by @CWOTUS and the talking heads in the Republican party, it is not a panacea for all of our economic problems. A Google search will yield lots of information biased one way or the other, the truth is that it will not cause the economy to implode and it will not miraculously lift the working poor to the middle class.

Being a minimum wage worker (and actually paying to work my full-time job at this point), I love the idea of increasing the minimum wage as it will put more money in my pocket. The reality of my situation is that every cent that comes in my pocket will be put right back into the economy as I buy my kids their first pairs of new shoes in about two years, or pick up a pair of pants that actually fit my oldest son.

In an empathetic, bleeding heart liberal sort of way, I want the minimum wage increased in order to help out families at the lowest end of the socioeconomic spectrum. But it is essential that we look at whether it will have the desired impact or whether it will backfire in the long run.

Either way I believe it is time for us to all take a look at those suffering most in our country and come up with some solid, workable solutions for lifting people out of poverty once and for all.

CWOTUS's avatar

Compared to the Dresden bombings, @SuperMouse, no, the minimum wage laws are not “the apocalypse” (and I never said that they were). But if you compare photos of the South Bronx from the 1980s to Dresden after its fire-bombing, maybe it is, it’s sort of a slow-motion apocalypse.

So, yes, I guess that minimum wage laws are apocalyptic, in the same way that bombs are, but they act more slowly—and they’re self-inflicted, by people who should know better.

jca's avatar

@uberbatman: I think what my coworker means is that, using your example, if a store needs 8 people to run it, they will instead have 16 part timers instead of 8 full timers, and therefore avoid having to pay benefits.

SuperMouse's avatar

@CWOTUS you seem rather unacquainted with the concept of hyperbole.

BTW, I am wondering, are you saying that the condition of the South Bronx in the 1980’s was a direct result of a raise in the minimum wage?

josie's avatar

If it is a bunch of politicians who determine what wages should be, and not the labor “market”, then why not get serious and raise the minimum wage to $20 and hour?

CWOTUS's avatar

I know hyperbole pretty well, @SuperMouse. In fact, I invented it. A million years ago.

I could say that you seem to be unacquainted with the concept of reality.

The conditions of most of our inner cities stem from the unemployability (for various reasons) of the residents leading to long-term unemployment leading to crime and ultimate destruction. If you don’t think that our inner cities are destroyed, then my hyperbolic and tongue-in-cheek assertion above is proven correct.

SuperMouse's avatar

@CWOTUS I am not sure where you got the impression that I don’t see the poverty and deplorable conditions in our inner-cities, mostly because nothing I have written has even come close to giving that impression. I am having trouble understanding how you are seeing this proposed increase in the minimum wage as a direct cause of those conditions, especially when the conditions already exist.

I also don’t believe you are old enough to have invented hyperbole a million years ago.

phaedryx's avatar

I’d rather see them explore the alternatives: http://en.wikipedia.org/wiki/Minimum_wage#Alternatives

PhiNotPi's avatar

I’ve been trying to do some analysis on this problem. I’ll probably post again once I have some detailed thoughts.

Meanwhile, here’s a circular flow diagram for your enjoyment.

Jaxk's avatar

Some of this I find amusing. There seems to be a thread here that if the CEOs simply took less, there would be plenty of money to raise the minimum wage. Guess what, those CEOs don’t have any minimum wage jobs. GE, Ford, Goldman-Sachs don’t hire at minimum wage, the small business owners do. The restaurant down the street, or the cleaners or convenience store, even the McDonald’s is owned by a small business owner. Those guys aren’t making millions, they’re barely surviving. So when you raise the minimum wage, their costs will dramatically increase. It’s not the benefits because they already aren’t providing benefits. Hell they only have 5–10 employees to begin with. What they do is to sweep the floor less often or it may take you an extra minute to be served. Maybe the owner or manager will work the extra shift. There are all kinds of ways to reduce headcount that only come into play when your business is in jeopardy. We seem to believe that all businesses are big businesses, They’re not. The workforce participation rate has been declining for ten years but that decline has accelerated for the past four. If we want to see it accelerate even further, this is the way to do it.

flutherother's avatar

I’m in favour of raising the minimum wage. If you are prepared to work full time you should earn at least enough to live on. Anything less is immoral and akin to slavery. Never mind the ‘unintended consequences’ lets think about the intended consequences and of the labourer being worthy of his hire. Society having painfully evolved from the dark days of the Victorian workhouse and human slavery I’m surprised we are even having this discussion. Let’s remember, people aren’t here to serve the economy, the economy is here to serve the people. All of them.

ETpro's avatar

I see you’re back to your cherry picking best, @Jaxk. WalMart, Kmart, retailers in general, all the big fast food restaurants, hotel and motel chains, the service sector in general, they hire minimum wage. And they hire a far greater portion of the workforce than your cherry picked list does. Again, there are no freebies in economics. All you are doing by pushing the minimum wage below the poverty line is partially transferring the cost of paying for those workers from their employers to all taxpayers in the form of AFDC, Medicaid, and state and local housing assistance. Wouldn’t it be fairer to expect those who wish to shop at Walmart to pay for the wages of that firm’s workers than to partially transfer Walmart’s costs to all taxpaying Americans, even those who never step inside a Walmart store?

According to the US Bureau of Labor Statistics, in 2011, 1.7 million earned exactly the prevailing Federal minimum wage of $7.25 per hour. About 2.2 million had wages below the minimum.

I do not understand the concept of magic money. Perhaps you can explain it to me. How is it taking 12 million per year in wages out of a company to pay one man costs nothing to the company, but splitting it up between 12,000 people destroys the company’s bottom line? Also, how is it Japan and Germany are able to find competent executives (Germany is the largest lender nation on Earth) who can lead their companies effectively, and yet they magically pay about 3% of what the US must pay the same level employee to do an effective job.

jerv's avatar

The minimum wage in WA is already higher ($9.19) and the world didn’t end.

Note that many who claim that this will put the kibosh on hiring also feel that making the rich pay the same tax rates as the middle class is theft; they have some strange ideas about economics.

We already have plenty of employers hiring part-time only to save money, and some preferring to put their record profits into executive compensation rather than increase wages or expand the company. I don’t see that changing; they already stopped hiring years ago, even before Obama was elected.

@Jaxk Entirely correct, and it’s extremely unfair to punish struggling small businesses because a few multinational corporations are unethical.

PhiNotPi's avatar

Does anyone think that it might be a valid solution for corporations/conglomerates to pay a higher minimum wage than other companies? This way, small business do not have to pay a minimum wage that they cannot afford, and corporations would be forced to use some of their excess profits to pay workers more.

jerv's avatar

@PhiNotPi Compare Walmart to Costco like the Harvard Business Review did. Costco pays good wages and has decent benefits while Walmart pays crap and teaches employees how to scam Medicaid. Less turnover means lower training costs. Higher pay and morale means less employee theft. Costco has better projections for future earnings. In short, low wages are a false savings for employers.

Then again, the big thing for the last few years has been to ignore sustainability or growth, and pass on costs to others for the sake of short-term profit. It’s practically what the current Republican economic policy is built around.

CWOTUS's avatar

How anyone can deem it “unethical” for hiring managers and workers to come to an agreement about the exchange of labor for wages which may violate a mandated “minimum” is beyond me. It may be illegal, but it certainly isn’t unethical.

ETpro's avatar

This article about how the US is near the bottom of the developed world in low-end wages paid seems relevant.

jerv's avatar

@CWOTUS I suppose threats of homelessness and starvation do not qualify as “agreement under duress” :/

CWOTUS's avatar

What about the people who are already homeless and starving, @jerv, and yet they can’t take employment that may be offered at lower wages? Nope. Too bad for you guys. Keep starving under the bridge until somebody feels sorry enough for you.

JLeslie's avatar

@CWOTUS Why are they starving under the bridge? Isn’t there welfare for them? Food stamps?

woodcutter's avatar

It’s just fluff dreams by those trying to keep their base exited. It’s amazing that’s all it takes. 9 bucks an hour is shit. Impossible to live well on. They will pay higher income taxes and will realize almost no increase in their standard of living.Its a dumb idea

CWOTUS's avatar

You’d have to ask @jerv, @JLeslie.

jerv's avatar

@JLeslie That would be theft, as would paying a minimum wage that is actually enough to live on. Some would argue that those programs are too generous as they offer a better standard of living than a minimum wage job, but that is simply because minimum wage isn’t enough to a standard of living compliant with the UDHR.

@CWOTUS Admit it, you have no concern at all for human rights, which comes as no surprise as your statement is basically a confession that you have too little empathy to qualify as being human yourself.

Now, the solution isn’t to cut welfare, but to make jobs more attractive than being on the government dime. If the government offers food and shelter, employers have to offer at least food and shelter (or enough wages to get them) in order to be at all competitive. If you didn’t know that little thing about how free markets work, then you shouldn’t chime in on any economic conversation until you have at least a fourth-grade understanding of how our economy works.
Also note that that would cut government spending, which in turn would reduce their need for revenue; lower taxes! As a side benefit, the decrease in demand for government assistance would allow the government to reduce their headcounts (and save more taxpayer money), thus fulfilling the Republican’s desire for reduced spending, lower taxes, and smaller government.
So anyone who opposes this also opposes traditional Republican values and human rights simply because Obama and the Democrats must be Socialist and wrong.

@woodcutter Sadly, you are entirely correct. I earn $12/hr and pull in OT consistently, yet once you take out for taxes and insurance, my take-home is barely enough for rent and the gas I use to commute. If not for my wife’s income, we would not be able to afford luxuries like food, utilities, doing laundry, or the occasional medical expense.
However, we cannot really make the cost of living lower because of the interplay between wages and prices. See, if the McDonalds fry cook gets a raise, the price of my fries will go up so that corporate profits remain good. The ripple effect is astounding.
Of course, $7.25 back in the Reagan era went a shitload further than $9 now, but the only way for the wealthy to keep getting richer is to accelerate the reduction in real-world incomes of us bottom 90%.

woodcutter's avatar

There was a time once, that I was actually earning 9 an hour. And that was my raise from 8.50. I actually took home a tad bit less because of that. How many, percentage wise, are actually being paid minimum wage in the US? I think the number would be very low. So we are discussing raising the pay for a few people who don’t make much (entry level jobs), to scale that is still too low, still end up being the lowest paid workers? With little to no more spending power than before? No one sees anything about this plan that makes it a bit less than frivolous?

CWOTUS's avatar

I’m ignoring your insults – again – @jerv, because I understand your mental processes frequently cause you to say inappropriate things, and incorrect things, too.

The fact is that I do believe in human rights, more than most in this forum, I believe. I believe that people have a fundamental right to accept employment at wages that you may deem “too low”, but apparently you believe that those people don’t have that right. And yet I’m the one accused of having no regard for human rights. So, you’re wrong. Just wrong. And the insulting tone is uncalled-for. I don’t insult you.

The number of people who work an entire career at “minimum wage”, whatever that happens to be, is so vanishingly small as to be unworthy of Congressional (or State Legislative) action to set a floor “minimum wage”. It’s “feel-good” politics. Those who campaign for the minimum wage, lobby for it, and force its passage – and of course the politicians who eventually craft the bills and shepherd them through the legislature and then to the executive for final approval all find ways to pat themselves on the back based on their “support for human rights”. Blah. It’s all smoke and mirrors.

What those laws actually do is prevent a lot of employment of various potential workers who have no experience, bad work histories, mental, emotional and other problems that would make them marginally acceptable at lower rates, but totally unacceptable at the new “minimum”. But if they could just get that first job, they could start to develop good work habits, improve their skills and abilities to get along with other workers and with modern work practices, catch up on or continue their education with an employer’s help, and move up “the ladder” into better jobs with more benefits, higher wages and more responsibility. But if they can’t get on that first rung of the ladder, then too bad for them.

If anyone would like to point out an employee who has worked his or her whole career (of at least five years, please) I can probably point to a hundred who did that for a short while, and then went on to more and better.

I have all kinds of sympathy for the ones who, for various reasons, including their own bad choices in the past regarding education, drugs, criminal history, accident, illness, birth defect, whatever, have rendered them incapable of improving on a minimum wage job. But there are better ways to help that relatively small minority rather than rendering whole classes of potential employees permanently unemployable in this country because they can’t return enough value to a potential employer to justify their hire.

I don’t know why this makes me the bad guy, or why it’s so hard to understand.

No, minimum wage laws don’t “wreck our cities” ... overnight… but they do wreck the lives of the people who can’t get onto the ladder. I don’t want to hurt those people, but I’m the bad guy. I don’t get this.

jerv's avatar

@CWOTUS If such wages were sufficient for basic food, shelter, and medical care or qualifications for supplemental programs were changed so that you didn’t have people falling though the cracks, I would have a different opinion on the matter.

On a more personal note, the reason you seem to be the bad guy is much the same reason as why I no longer attempt to be nice half the time; misunderstanding. The big difference between us is that, after many failed attempts to correct it, I have learned to go with it in a way that often provokes a response like the one you just made; a reasonable one with more detail. By me being an asshole, you look better by comparison. There is a method to my madness ;)

CWOTUS's avatar

@jerv you’re still making the assumption – implied in nearly all of these arguments – that some huge number of people work their entire lives at “minimum wage”. I don’t doubt that’s true for some unfortunate people, and maybe “a large number” of unfortunate people, but a tiny fraction of “the working population”.

So, for some tiny fraction of unfortunate workers who can’t get promoted out of their minimum wage jobs, we’re making it impossible for many marginal workers to get their very first job, the job that starts their successful careers of continued promotion and raises. That’s because these laws do lead to increases in unemployment, make no mistake. And very few of those first-time workers have to support a family on the wages they earn, and certainly not for very long, if they’re competent and willing to work. They just need that start to get in the game and start working.

ETpro's avatar

@CWOTUS Why is it that the USA, the richest nations in the history of Earth, cannot pay a basic living wage to entry-level workers when so much of the rest of the developed world pays far more. Since middle class demand drives our consumer economy, why is it a necessary idea to slowly starve the middle class out of existence so the richest 1/10th of 1% can have far, far more even though they are already fabulously wealthy? Let’s forget about ethics. What makes that a smart policy for a nation to embrace?

jerv's avatar

@CWOTUS Again, a miscommunication.

A person earning $9/hr is already above the federal minimum wage and therefore doesn’t figure into your calculations. Let us disregard the fact that many are part-timers and/or live in high cost-of-living areas. In fact, the variability of living costs is why many states have minimum wages higher than the federal standard; $00 may get you a nice 3-bedroom apartment in the Midwest but will barely allow you to go halves on a Studio anyplace I have lived.

Of course, it might be easier if the labor force in general were more educated and therefore more qualified. It might also help if actual knowledge counted more than degrees; all too often, know-nothings with diplomas trump years of actual on-the-job experience, leaving many with no alternative except relatively menial jobs. As it stands the cost of getting a non-menial job means that, unlike 20 years ago, your only ways out are to either take on massive debt with no guarantee of being able to repay it, or being poor merely because your parents wouldn’t give you anything except tuition money.

It is also funny that you seem to be looking at a different segment of the population that I have spent most of my life around. How many people do you know that worked their way to a Masters degree only to be stuck working the floor at Home Depot? Or those who had decent jobs that evaporated and they could not get anything comparable and thus wound up with something far more menial? That happened a lot over the last few years (even to me; my wages went down ~40% that way), and I know others (like my parents) that have had far worse. I don’t know how bad you’ve ever had it or what you have actually seen, but I have seen some fucked up shit, and have been lucky that, as bad as I have ever had it, I have seen worse. The sort of thing you seem to consider a rare statistical anomaly only slightly more common than a winning lottery ticket.

True, I see other counter-examples so it’s not all doom-and-gloom, but I cannot help but think that you seem to have a rather antiquated and optimistic delusion going there; you ignore half the picture. At best, you assume that upward mobility still exists on the scale that it used to.

Plus, you keep saying “very few” and “tiny fraction”, but not only is that incorrect, it is also ignoring the scale of the numbers we are dealing with. The way I see it, you are basically saying (in part) that the Sandy Hook shooting isn’t worth even noticing since 20 children are only a tiny fraction of the entire child population of the US. Also, I don’t consider “tens of millions” to be “very few”, though you may consider that, since only 10% of households are “working poor”, things must not be that bad. Hey, 90% of working people are not poor, so everything must be working fine! Never mind that that is the highest in the Industrialized world….

Those who can advance out of a minimum wage job will do so and create a vacancy that needs filling no matter what the minimum wage is. And I know many people who are trying to support a family on rather meager incomes; often the combined demands of work and family preclude the possibility of putting too much time/effort into job searches. Have you ever tried to get an interview after 6PM or on a weekend? If you can afford to take the time off of work to interview at a more normal time, then you really don’t need a better job.

Keep assuming that the only people in the low-wage jobs are either lazy or first-time workers and I will continue to consider you delusional simply because that runs entirely counter to my decades of personal observation. I trust what my eyes see directly more than what other people say they read.

@ETpro ~Because Trickle-down economics really works.
Never mind the fact that every time is has been tried, it has failed; just give it a dose of steroids and PCP and it will work brilliantly!

avaeve's avatar

@jca

The general consensus of economists is that minimum wage laws cause unemployment. That is based on this peer-review link of 100 minimum wage studies conducted by various economists throughout the prior years. It covers other countries as well.

Over here link you can find a wealth of up-to-date facts based on new studies. If the studies are too long, there are some quick statistics and Op-Eds as well.

Considering the purpose of the minimum wage law was to help elevate the bottom class of the work force by making an equitable distribution of income, you can see, based on the studies, how it not only fails to fulfill its purpose (elevate/reduce poverty), it actually causes a reverse effect (more unemployment).

jerv's avatar

@avaeve It is also said that lowering tax rates increases revenue. That means that, theoretically, maximum revenue is generated at a 0% tax rate. It doesn’t take a degree in Economics to realize that that isn’t true.

The truth is that there is an optimal point somewhere above zero. In the context of minimum wage, if you set the minimum wage too high then yes, unemployment rises. Set it too low and demand for goods/services declines and also causes a rise in unemployment.

Note that as the real-dollar wealth of many Americans declines, consumer spending lessens a bit? Less disposable income means less spending on luxuries, so those who supply said luxuries have a hard time staying in business without making some cuts. Consumer confidence also plays a role; the more pessimistic people are about the future, the more likely they are to save for a rainy day instead of spend.

I will have to look at your links later, but your synopsis runs counter to what I have seen; Western Europe generally has higher minimum wages yet lower poverty. Then again, there are other factors at work, so it is entirely possible that the relationship between minimum wage and poverty rates is coincidental rather than causal.

Regardless, there are other ways to end poverty than just raising the minimum wage. Of course, many of those ideas would be considered Socialism. And it doesn’t help that anything that tries to remedy the problems we have could never get through a Congress that contains a rather large number of people who are willing to filibuster roll call in order unless they get their way; that makes it hard to accomplish anything productive.

rooeytoo's avatar

In Australia the minimum wage is 15. 96 or about 638.40 per week at 40 hours.

http://www.fairwork.gov.au/pay/national-minimum-wage/pages/default.aspx

Here is estimated cost of living

http://www.australia-migration.com/page/Cost_of_Living/462

and here is the tax rate

http://www.ato.gov.au/content/12333.htm

So raising minimum wage doesn’t seem to accomplish much because expenses go right up with it.

Everyone forgets small business who cannot afford to pay higher wages, maternity and paternity leave, etc. They end up paying under the table or they go out of business and then there is no job at any pay rate.

I think floor sweepers and brain surgeons or skilled mechanics or anyone who is trained to do a skilled job do not deserve the same amount of pay. Let the floor sweeper start at a lower rate and be rewarded by a higher wage when she/he shows the incentive, initiative and ambition to better themselves. Higher minimum wage also means less employment opportunities for seniors and teenagers.

Oh yeah, a pair of levis costs over $100 here and Nikes almost double USA price, etc.

So I don’t know that raising minimum wage is a guarantee that anything is going to change. When I started working it was around one dollar or a dollar twenty five per hour but everything cost less. I don’t see it being much different today.

PhiNotPi's avatar

One other thing to consider is the possibility that raising minimum wage to $9 is simply countering the effects of inflation. Here is a chart of the past increases in minimum wage. The dark blue line is nominal dollars, while the light blue line adjusts for inflation. The light blue is the important one.

When you look at this chart, you can see that minimum wage, when adjusted for inflation, actually used to be higher than it is today. In some ways, theses minimum wage increases can be seen as simply getting us back on track as to what minimum wage used to be.

bolwerk's avatar

$9 isn’t high enough, but it’s a start for documented workers. Make it $20 for illegal immigrants, and enforce it. Cheaper than building a wall.

Paradox25's avatar

I’m of the opinion that nobody should have to work more than one fulltime job to support a minimal lifestyle based on just surviving. I realize that everything, including raising a minimal wage, has at least some sort of domino effect on everything else in the long run. Without supporting some type of minimum wage and basic worker’s rights what is to stop businesses from utilizing virtual slave labor to profit? Many companies can afford to pay their workers more, but choose not to.

Jaxk's avatar

Here is an interesting article about who is affected by the minimum wage. It seems that half the minimum wage earners are under 25. Just starting out or in college. Most of the remaining come from middle income households that use it to provide supplemental income. That’s not to say there are no working poor in the group but the majority of the minimum wage earners are not the working poor.

@ETpro – Nothing selective about my points. If you look at the fast food businesses or small stores, they are independently owned. Franchised for the brand but privately owned. Places like Walmart will have some effect and will have the effect of smaller raises and less promotion opportunities. “Most Walmart jobs already pay $9 except for the entry level. So we’ll sqeeze those jobs around the new minimum wage. Lower top and higher bottom.

We already do pretty well among industrialized countries as far as average wages. In fact we are at the top of the list. Do we really want to squeeze the wages into a smaller spread, closer to the bottom.

wundayatta's avatar

It’s pretty simple—a story of supply and demand. When something becomes more expensive, people use less of it. When low cost labor becomes higher cost, people use less of it.

You might think there are restrictions on an employers ability to use less of it, because they need the labor they need. But in fact, there are many ways to substitute lower cost labor for higher cost labor. Part time labor is one way of doing this. Adding capital improvements that reduce the need for labor. Or just going out of business and opening up another business that can be more profitable using higher cost labor. Or just going out of business and becoming a wage slave, yourself. Lots of options.

I think that what the minimum wage really does is set a social standard for what we wish the world would be like. It doesn’t change anything overall, although it does create some distortions in the marketplace. But it makes politicians and low wage workers feel better. Some low wage workers lose their jobs, but the ones that get the wage increases probably don’t notice that.

Of course, it encourages low wage workers who are willing to work under the table. Thus it encourages immigrants who lack proper documentation. Employers are willing to hire them under the table because they believe they won’t complain for fear of being deported. So people who are against minimum wage legislation are also in favor of raising the barriers for immigration because they know that serves as a counter weight to rising minimum wages. It reduces the cost of “illegal” labor.

It’s some of the more cynical legislation ever, but it keeps wages low, and it keeps minimum wages from going up very high because people know it’ll just suck more illegal labor in to compete for those jobs.

Personally, I doubt that minimum wage legislation changes much overall. I think it’s symbolic. I think the market works around it. I think it shifts Americans into assistance programs and attracts more foreign labor that is will to work illegally. It benefits a few people, but does reduce American low wage employment while increasing American high wage employment. Thus it makes Americans look like they are doing better, except for those in poverty. It also creates a benefit for foreign workers, and attracts hungry people who are willing to work hard.

jerv's avatar

@rooeytoo True as far as it goes, but inflation always happens. That is the reason we are even considering increasing hte minimum wage. I mean, when you started working, $1.25/hr could actually buy something whereas now, as of 2013, that would not leave enough take-home pay for me to even afford the gas I use to commute to/from work, let alone anything like food or rent.
Also, how many many brain surgeons or skilled mechanics earn minimum wage? This really doesn’t apply to them; minimum wage is more about what the lowest acceptable standard for any human being than it is about rewarding excellence.

@PhiNotPi Entirely correct. The problem is that math education is so poor in this country that people don’t understand the entire concept that a 2013 dollar isn’t the same as a 1985 dollar.

@Jaxk How many of those are actually earning minimum wage, and how many are earning above it enough to be excluded from those numbers but not enough to make any practical difference? There isn’t much difference between WA minimum wage ($9.19) and a burger-flipping job that pays $9.50, except that you can say that there are few people earning minimum wage. That is the group that a lot of your working poor come from.
Also, what use is having the highest wages if the cost of living (especially medical costs) are also ridiculously high? That almost qualifies as a non sequitor. Look at it not in dollar amounts, but in how many hours one must work to afford a modest apartment with utilities and adequate nutrition. With rents around $800 and bread going for $3/loaf for the cheap stuff, it takes more dollars than it did back in 1968, or even 2008.

@wundayatta Pretty much. I think it highlights the fact that the problem isn’t low wages, but rather, high costs. I also think that this is really a way of saying that they underestimated inflation when they established how the minimum wage should increase over time.

PhiNotPi's avatar

I am in support of the increase in minimum wage to a livable salary and the idea of tying it to inflation to make sure that it stays livable.

Increases to minimum wage need to be performed very gradually. There is a delay between when workers are paid more and when the workers start spending more. If minimum wage increases too much too quickly, businesses would suffer and would have to make substantial cutbacks in the number of workers. If the wage increase is small, however, then businesses can afford to keep their workers. Eventually, consumer demand will increase. Since the supply of products remains constant, companies will then raise the prices of their products.

The total quantity of goods being traded does not substantially increase because workers are not substantially more productive. Most of the effects will be in the form of inflation, since both costs and wages rise.

However, the inflation will not completely cancel out the increase in minimum wage. If minimum wage is doubled (for example), then there would be a substantial increase to both costs and wages. The increase, however, won’t be double. Thus, there would actually be a real increase in minimum wage.

Where would this money come from? It would come from the salaries of above-minimum-wage workers, who actually earn less due to inflation and a lack of proportional wage increases.

Minimum wage acts as an equalizer, reducing the salaries of higher-income individuals to guarantee that everyone has enough money to pay for necessities.

rooeytoo's avatar

The question is did the 1.25 per hour buy as much as the 9 buys today. And does the 15 in Australia buy as much or more than the 9 in USA. All things are relative.

And you make the point, minimum wage does not apply to brain surgeons or skilled labor, it applies to unskilled who would not have a job if small business is required to pay higher wages. Get a skill and you can demand a higher level or recompense.

jerv's avatar

@rooeytoo Assuming that there is a demand for that skill; no guarantee that there will be.
Of course the easiest (and, increasingly, only) way to get a skill is education… at an average cost of ~$29,000/yr. If you cannot afford that, do not feel like taking on massive debt without the ability to repay, and lack the skill, drive, and luck required to be a successful entrepreneur, odds are that you will remain low-income for life. This isn’t the 1950s where hard work and drive are all it takes. In fact, it often doesn’t even matter what you know these days, only what you have the degrees for.

@PhiNotPi I have seen many things to the effect of, “121% of all economic gains in the last five years have gone to the top 1%”, and similar. While the exact figures vary, the truth it that the high-income people have benefited disproportionately. More relevantly, they have gotten so accustomed to it that they will inflict massive harm on the majority of people in order to keep things going the way they are.

rooeytoo's avatar

@jerv so you think raising the minimum wage is going to cure or even have the least effect on all those problems?

jerv's avatar

@rooeytoo I see it as inevitable unless we are willing to violate the UDHR. Specifically, Article 23, section 3 states:

” (3) Everyone who works has the right to just and favourable remuneration ensuring for himself and his family an existence worthy of human dignity, and supplemented, if necessary, by other means of social protection.”

See, we don’t have the sort of social programs many other places do. We consider places like Europe, Canada, and Australia to be Socialists; it is unlikely that we would ever allow “other means of social protection” to pick up where employers fall short. By the same token, employers won’t willingly pay enough to make such government subsidies unnecessary, and it could be argued that many of them (especially smaller businesses) cannot.

Raising the minimum wage will have some effects in the short-term, the same effects it always had, but the truth is that any fix will only be temporary, and unless we address the root cause of the problems then we will be right back where we are in a few years. Unfortunately, we have a rather large group of people who actually seek to amplify the problems, and those people vote and elect their own into office. Basically, anything that helps the poor or has the least impact on the profits of the rich is un-American, Socialist, Fascist theft that will collapse our economy, so the only real solution would be a major overhaul of our nation. We are too divided to ever enact a real solution, and there are those that I honestly believe would rather see the world burn than ever allow what needs to be done to be done.

In other words, this isn’t an economic issue; it’s a social one. And many in our society honestly don’t care about the less fortunate as they think that the only way to ever be poor is to be too lazy to deserve to live.

CWOTUS's avatar

It’s funny, @jerv, but for all the bleating about “the less unfortunate”, no one, and I mean no one who advocates for the minimum wage laws, ever addresses the very real issue of the kids (mostly black and Hispanic, and nearly all under-educated and under-privileged) who can’t get their first damn job until they’re almost thirty, because they don’t offer enough value for the new minimum, and therefore cannot be – and will not be – hired.

Yet I’m the heartless one. The mind reels. I really do have a heart, and a mind.

rooeytoo's avatar

@CWOTUS – I hired kids for so many years and I know exactly what you are saying. But people just don’t stop to think beyond their own prejudices and ideas.

And @jerv – if you looked at my links you saw what the 15 bucks an hour buys you in Australia, not even a pack of cigs if you still smoke. There just isn’t a simple answer, no matter how badly you want one.

jerv's avatar

@CWOTUS Considering how our education is compared to the rest of the First World, I am not entirely surprised. Hell, many of our college graduates are less qualified than the 12th-grade-equivalents of other nations. The solution there is better education, but that is a whole other discussion.

However, I maintain that until employers can offer better than the minimum offered by government assistance, welfare is going to be more attractive. The solution advocated by many Republicans is to gut those programs until they fall below the minimum standards for nutrition and shelter. Personally, I would rather see the free market work as intended; have the superior product win.

One way or another, the only way to avoid human rights issues is for someone to pay; either employers, or taxpayers (which means middle-class and small businesses mostly). The real question is, “What is the most equitable way to make it happen?”.

@rooeytoo Last time I was in Australia (1997) I was glad I was buying smokes from the ship store at $15/carton.
I know there is no simple answer (I am almost offended that you seem to think I believe there is one!), but I find, “Fuck the poor!” to be the least acceptable, and allowing the status quo (letting the poor become poorer so that the rich can become richer) to continue follows a close second. Look at all the financial gains we have made here in the last few years; how about having some of that trickle down to those of us in the bottom 90%?
We let investors have more money so that they would create jobs; that never happened, so lets end that failed policy and try something different. Lets spend a bit more wisely, and maybe sacrifice a little short-term wealth for at least a shot at something more sustainable than our downhill slide.

CWOTUS's avatar

I’m done arguing with you on this, @jerv. You continue to dodge the question and shift focus to “how things ought to be if only”
– the Republicans
– the Rich
– somebody else
would make things better in just the way you want them to be, and blaming everyone else except this and other such stupid ideas as the good intentions paving the road to Hell.

I’m telling you that if people were allowed to take their first jobs at the value they actually represent to employers who are willing to pay them for their actual value, then they would make their own improvements in their lives, their skills and education, their self-discipline and general employability, and their status – and the nation’s – would improve, as it did for most of our first two hundred years of operation. You seem to think that improvement can be mandated, and I’m telling you that the longer we attempt that kind of stupid “solution” improvement will not occur. So far, I’m being proved right, though I would rather not be.

If we’re not going to adopt my idea to back off the very idea of “minimum wage” (at least for young people taking their first jobs), or @Jaxk‘s plan to raise the minimum wage to $20 per hour (maybe he will be generous and suggest $50; after all, it’s not our money), then we might as well adopt Jonathan Swift’s Modest Proposal to eat the poor, because we are bound to increase their ranks.

jerv's avatar

@CWOTUS Are you saying that obstructionism does not exist in Congress? Are you denying that there are some who will halt all progress until their pet project goes through unaltered, and have publicly stated that compromise is weakness? And which side of the fence does the majority of that stuff come from? It’s not my fault that the GOP has been taken over by radicals. As for the rich, well, they don’t set their own tax rates or actually make policy, so it isn’t their fault that the system is set up to screw the masses. Hell, there are quite a few that have some of the same objections I do; Warren Buffet, for instance.

But strictly on-topic, I see no will to fundamentally alter our flawed system, or even change many of the details, largely for reasons I detailed above. It seems that you see that assertion as “dodging the question and shifting the focus”. Pardon me for looking past the symptoms and band-aid solutions to see why we have these problems to begin with and look for a more lasting solution.

I don’t think real solutions can be mandated. I feel that when mandates are necessary, things have gotten way out of hand because it’s been proven that people cannot be trusted to do the right thing without coercion. It’s the lesser of evils, and considering how evil I feel mandates often are, that should tell you how badly things have been screwed up.

My fear is that employers may feel that their unskilled employees do not deserve the basics of life. Do you have faith that voluntary charity will make up any shortfall and make certain government programs unnecessary? I don’t, simply because history has proven that. I agree that unskilled workers should improve their skills if they want better things like flatscreen TVs and fancy food, but I also think that even the most menial laborer deserves enough to be able to eat regularly and live indoors, and would rather have that money come from people who know something about economics than from DC, though history has also proven that that won’t happen either.

I think that the fundamental conflict between you and I is that you seem to be stuck in the mindset of the current framework while I am looking at how things are now, how they failed in the past, structural flaws in our current system, what has worked elsewhere where they use different frameworks, and generally taking a much broader view than you are while simultaneously seeing the potential roadblocks to implementing any sort of steps in the right direction in light of a documentable dogged persistence of opposing any and all such measures. In other words, you and I are looking at this completely differently and not understanding how the others view is even possible. It doesn’t help that you make the same mistake @Jaxk does all the time; you underestimate my cynicism.

Minimum Wage would be irrelevant if there were a different paradigm. The catch there is that, since employers would only be paying based on perceived value, that would increase the need for other social safety nets, likely government run. I don’t want that; it rarely works out well.

It really is a situation where there are no good answers. An outrageously high minimum wage would bankrupt small businesses and cause rampant unemployment. Doing nothing will keep us on course to becoming a Third World nation. Dropping the idea of Minimum Wage would turn our decline into a nosedive; I have zero faith that letting the inmates run the asylum could possibly be a good thing. A fundamental change in how we operate of the sort that would render minimum wages irrelevant would never pass through Congress, nor would it be voluntarily adopted without mandates.

I believe that the least-bad, least disruptive, and most likely to even happen option is to bump up the minimum wage to match inflation as WA state does each year, and to adjust it for regional cost of living.

Ron_C's avatar

The arguments against raising the minimum wage are the same ones used to stop slavery or limiting the number of workers permitted in this country to pick crops.

jerv's avatar

FYI, over half of those earning minimum wage are over the age of 25; it isn’t about teens getting their first job.

Source

PhiNotPi's avatar

What if the minimum wage increases were balanced with reduced taxes on small businesses and a flat income (and capital gains) tax increase?

The minimum wage increase will funnel money from a wide variety of businesses into a specific group of people. The tax changes will funnel money from a wide range of people into a specific group of businesses.

This will benefit small businesses and low wage individuals, at the cost of large corporations and higher-income individuals.

As far as I can tell, the increase in both wages and income taxes will prevent most of the inflation. Since the increase in wages is concentrated, and the increase in taxes is spread out, the lower-income individuals will still have more expendable cash. Higher-income individuals will have less expendable cash.

With the reduced taxes on small businesses, those businesses would be able to afford the higher wages instead of simply shutting down. This will prevent the widespread layoffs feared by many. The larger corporations, who can better afford to pay their employees (though maybe by reducing their billion-dollar profits), will not be given a tax break.

Thoughts?

CWOTUS's avatar

Opposed. I’m tired – sick and tired – of various factions of our governments attempting to manipulate people’s behavior into various “socially acceptable” ways via manipulation of the tax code. It has gotten us to where we are today, a massive, poorly understood tax code loaded with traps for the unwary (and placed there by the very wary and well-connected), introduced with much fanfare by various politicians promising that “this time, they got it right” (and loaded it with pork for their friends and – surprise, surprise, surprise – themselves), soon to be gamed in ways that no one predicted or imagined (except for those who wouldn’t get on the bandwagon and were shouted down when they protested, and consequently weren’t very well listened to).

No. A thousand times, no.

CWOTUS's avatar

@jerv I try to never underestimate your degree of cynicism, because it generally mimics my own. But where you retain your cynicism for “the world at large”, I direct mine to anyone who claims he has “the solution to all of my problems, if I will just sign on the line and not look into the meaningless details”. That is, I trust my neighbors, as a rule, and maintain the right to choose new ones, and you seem to think that government, like policemen, “are just there to help”.

Your assertion, for example, that ”[m]y fear is that employers may feel that their unskilled employees do not deserve the basics of life” borders on paranoiac lunacy. Employers in this country aren’t running concentration camps surrounded by barbed wire and gun towers.

Like I said, I give up here.

PhiNotPi's avatar

@CWOTUS Oh well, but I think I get an A for effort though.

rooeytoo's avatar

How about a B for baloney.

PhiNotPi's avatar

Don’t forget that I am merely a teenager on an internet forum, not a professional in any field. If I come up with a stupid idea, well there’s my excuse: I’m inexperienced. I still believe I earned an A for effort, since there are a whole lot of people in this world who won’t even try to solve life’s problems.

CWOTUS's avatar

That’s fine, @PhiNotPi, and I’ll say that your heart is in the right place. Just don’t forget the paving material used for the road to Hell. The reason our government is so oppressive and large as it is (and getting more oppressive and larger with every “problem” – of its own causing – it attempts to “solve” for us) is because so many well-meaning people think they have the solution to all even one of everyone’s problems, and pass laws to force those solutions on the rest of us.

Please don’t join that crowd.

jerv's avatar

@CWOTUS First off, I never claimed to have all the solutions. I am a CNC machinist, not an economist or policy-maker. I have ideas, and I know quite a few things that have been proven to fail in the past (Horse and Sparrow economics, for one) but I don’t invest as much time/effort into these sort of things as a full-time economist would.

You seem to misread me as actually trusting government; I don’t. The fact that I trust government more than those that you place your faith in should tell you something about what I think of them. You go on to complain about government beoing large and oppressive, yet you support policies and actions that force government to grow and to regulate; you fail to realize that they would not need to intervene if there was no wrongdoing to correct. You also seem to think that increasing the need for government assistance will not cause the very things you claim to protest; bigger government and higher taxes.

If you don’t like the way government solves problems, then stop causing them. Do you know why employers don’t run concentration camps? Because they were about that bad a century ago and they were forced to stop by government.

Again, I think the government is there to step in when people fuck up. If you don’t like the way they handle things, stop fucking up. Get the private sector to fix things without Uncle Sam having to pick up the slack.

As for the tax code, I think that it is one of those things that had a bad framework covered with many layers of cheap paint. There is so much cruft on it that is makes Rococo look like minimalism. Personally, I would like to ditch it and start over again from scratch. Hell, I think my buddy’s opinion of laws (including the tax code) is right; if you can’t fit it on an index card in 9-point type, it probably has too many loopholes to be a good law.

CWOTUS's avatar

Your memory of history is so well-selected to support your arguments, @jerv… but it’s too bad that it ignores the huge fact that the conditions you so deplore by some employers (usually with huge government contracts, by the way, or paying off the government directly) were upheld by federal troops and the National Guard of most of the states where strikes occurred.

Furthermore, it’s your assumption, not mine that “more assistance” is required to “fix” everyone’s income problems.

You say that we should “stop causing [problems]” for government to resolve? I maintain that government should stop inventing and promoting “problems” out of all proportion to what really is a problem (and stop pretending that every problem can be resolved with a new government program or redistribution of others’ wealth). You can’t overlook one of the great statements by a champion of your viewpoint, Rahm Emmanuel, “Never let a crisis go to waste.” Classic. The meaning, of course, is “promote the hell out of that crisis and take advantage.”

jerv's avatar

@CWOTUS “Furthermore, it’s your assumption, not mine that “more assistance” is required to “fix” everyone’s income problems.”

Your continued misreading of me grows tiresome.

jerv's avatar

I think you ignored the real cause of that, namely people getting fed-up enough to cause a major disturbance, while simultaneously proving my point that we are all better off if things never get to the point where government feels the need to get involved. Of course, that can only happen if good faith negotiations are possible; in this era of “compromise is weakness”, we are inevitably going to repeat the past. In a way, we already are, or you wouldn’t be complaining about government stepping in (this time on the other side). Again with the small picture view.

pamorris's avatar

Contrary to most merchants, Costco is siding with Obama in his call to increase the federal minimum wage to $9 an hour. In fact, it would do the President one better, supporting a minimum hourly wage of $10.10.

ETpro's avatar

Costco pays their hourly employees very well. They have an innovative and welcome business model.

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