Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
The minimum wage in the US has never been high enough such that you would see the type of effects described in classical economic theory. Economists know from decades of empirical evidence that increases in the federal minimum wage have had minimal effects on employment. At the same time, it's also true that the majority of workers make above the federal minimum wage, so we would expect that there wouldn't be large changes in the labor market. ...
Drewjdeg, we agree upon these points. The minimum rate's detrimental effects upon employment have been temporary and only for enterprises' with greater lower wage rate costs proportional to their entire product costs.
Quote:
Originally Posted by Supposn
How inflationary is the federal minimum wage rate?
Although labor contributes a substantial portion, labor is only a portion of aggregate products' costs; (this is true even among service products). The federal minimum wage rate effects Low-wage labor and has extremely little proportional effect upon higher wage rates, [this is why] it is not among the primary causes of U.S. dollar's losses of purchasing power. ...
Mircea, rampant commodity speculation" did cause people to lose their jobs.
Federal Reserve Board chairman Alan Greenspan described it as "unjustifiable exuberance". President Bush's "credit crunch" caused a financial panic in the USA and globally.
Defaulting on a mortgage does not cause one to automatically lose their job. But widespread mortgage defaults due to banks knowingly making sub-prime rate "liar loans", and then bundling them for resale, speculators leveraging exotic unregulated derivative securities, certainly caused financial panic in the USA and worldwide, which caused great many job losses.
Refer to:
https://www.theguardian.com/business...nch.useconomy2
Oct 03, 2008*· Bush signs $700bn economic bail-out plan approved by Congress. Such is the freeze on funding that the governor of California, Arnold Schwarzenegger, said his state may need a loan of up to $7bn from the federal government to plug a short-term financial gap caused by the credit crunch.
Author: Andrew Clark
https://www.youtube.com/watch?v=XH7CvOeqS3g
Jul 21, 2015*· HEADLINE: Bush prods Congress on student loan bill ----- CAPTION: President Bush said Saturday that the credit crunch is threatening the availability of …
https://en.wikipedia.org/wiki/United...housing_bubble
The United States housing bubble was a real estate bubble affecting over half of the U.S. states. Housing prices peaked in early 2006, started to decline in 2006 and 2007, and reached new lows in 2012.[2] On December 30, 2008, the Case–Shiller home price index reported its largest price drop in its history.[3] The credit crisis resulting from the bursting of the housing bubble is an important cause of the 2007–2009 recession in the United States.[4][5]
Increased foreclosure rates in 2006–2007 among U.S. homeowners led to a crisis in August 2008 for the subprime, Alt-A, collateralized debt obligation (CDO), mortgage, credit, hedge fund, and foreign bank markets.[6] In October 2007, the U.S. Secretary of the Treasury called the bursting housing bubble "the most significant risk to our economy"
Your evidence is a Useless Tube video and Pukipedia?
Once again, you display total ignorance on all things economic.
The "credit crunch" was not economy-wide.
The "credit crunch" was not industry-wide, either.
The "credit crunch" was only in the housing sector.
The credit crunch in the housing sector had no bearing on the automotive industry, the automotive parts industry, the transportation industry, healthcare, hospitality, retail, grocery, exports, manufacturing or technology or any other industry or sector.
It was limited solely to housing.
If you default on a mortgage, you don't get laid-off the next day.
But, if you get laid-off, you might default on your mortgage.
That's what was happening. People were being laid-off or out-right terminated due to plant/facility closures.
Those plant/facility closures occurred because you had been experiencing Capital flight for years prior to 2008. Capital was flowing out of the US, mostly to southeast Asia.
Capital flight caused a loss of jobs.
The loss of jobs caused mortgage defaults.
Yes, many were obtaining new jobs within 90-180 days, but those jobs paid less than their previous jobs and they were left struggling with bills.
Note that nothing in the nonsense you posted shows any causal link to job losses.
That's because Capital flight was the causal link, not mortgage defaults.
RationalExpectations, since we both agree that the minimum wage rate is not a driver of U.S. dollar's inflation, this question is of little importance. Your description of a “substitute effect” puzzles me.
Increasing the minimum wage accelerates adoption of automation and technical jobs that accompany automation. But possibly you have something else in mind?
Quote:
Originally Posted by RationalExpectations
... [Originally Posted by Supposn:
The federal minimum wage rate effects Low-wage labor and has extremely little proportional effect upon higher wage rates.]
Untrue, of course. There is a well-documented substitution effect: minimum wage laws create economic incentives to substitute out relatively low quality and hence low wage employees while simultaneously substituting in relatively higher quality and hence more expensive employees. ...
Your evidence is a Useless Tube video and Pukipedia?
Once again, you display total ignorance on all things economic.
The "credit crunch" was not economy-wide.
The "credit crunch" was not industry-wide, either.
The "credit crunch" was only in the housing sector.
The credit crunch in the housing sector had no bearing on the automotive industry, the automotive parts industry, the transportation industry, healthcare, hospitality, retail, grocery, exports, manufacturing or technology or any other industry or sector.
It was limited solely to housing.
If you default on a mortgage, you don't get laid-off the next day.
But, if you get laid-off, you might default on your mortgage.
That's what was happening. People were being laid-off or out-right terminated due to plant/facility closures.
Those plant/facility closures occurred because you had been experiencing Capital flight for years prior to 2008. Capital was flowing out of the US, mostly to southeast Asia.
Capital flight caused a loss of jobs.
The loss of jobs caused mortgage defaults.
Yes, many were obtaining new jobs within 90-180 days, but those jobs paid less than their previous jobs and they were left struggling with bills.
Note that nothing in the nonsense you posted shows any causal link to job losses.
That's because Capital flight was the causal link, not mortgage defaults.
You accusing someone else of economic ignorance is a joke. You obviously were either not old enough to follow current events in 2008, or it was not relevant to your day job as convenience store clerk.
Small businesses provide 49% of all private sector jobs, and in 2008 they saw their access to capital become severely restricted. The financial crisis was in no way limited to housing.
Do some research before you start spouting nonsense.
You accusing someone else of economic ignorance is a joke. You obviously were either not old enough to follow current events in 2008, or it was not relevant to your day job as convenience store clerk.
Small businesses provide 49% of all private sector jobs, and in 2008 they saw their access to capital become severely restricted. The financial crisis was in no way limited to housing.
Do some research before you start spouting nonsense.
“The derivative markets have been accused for their alleged role in the financial crisis of 2007-2010. Specifically the Credit Default Swaps CDSs, financial instruments traded on the over the counter derivatives markets, and the Mortgage Backed Securities MBSs, a type of securitized debt. The leveraged operations are said to have generated an "irrational appeal" for risk taking, and the lack of clearing obligations also appeared as very damaging for the balance of the market. The G-20’s proposals for financial markets reform all stress these points, and suggest:
higher capital standards
stronger risk management
international surveillance of financial firms' operations
dynamic capital rules”.
The minimum wage rate is not among the primary drivers of the U.S. dollar’s inflation:
(The fractional portion of the federal minimum rate that’s beyond the theoretical market rate for the least desirable USA employee or job applicant);
Times (the fractional portion of minimum rate’s effects upon the direct and indirect aggregate wage rates contributing to USA’s aggregate production);
Times (the fractional portion of USA’s aggregate production costs attributable to direct and indirect hours of USA labors’ costs;
Equals (the fractional portion of USA’s inflation rate due to the federal minimum wage rate).
When we multiply a fraction by each other, the product’s a fraction less than that of any of its individual factors. This is why the minimum wage rate is not among the U.S. dollar’s primary inflation drivers.
The minimum wage rate is not among the primary drivers of the U.S. dollar’s inflation:
(The fractional portion of the federal minimum rate that’s beyond the theoretical market rate for the least desirable USA employee or job applicant);
Times (the fractional portion of minimum rate’s effects upon the direct and indirect aggregate wage rates contributing to USA’s aggregate production);
Times (the fractional portion of USA’s aggregate production costs attributable to direct and indirect hours of USA labors’ costs;
Equals (the fractional portion of USA’s inflation rate due to the federal minimum wage rate).
When we multiply a fraction by each other, the product’s a fraction less than that of any of its individual factors. This is why the minimum wage rate is not among the U.S. dollar’s primary inflation drivers.
A current auto plant, for example, with 2,000 employees will produce as many cars as 5,000 did before. In addition to the fact that they are currently making 1/2 what they did 20-50 years ago (indexed for inflation), they COULD make much more and you'd never notice anything in the price of a car.
Same goes for many many products as well as food. I am constantly amazed these days at how much I get for my money. As one example, in 1975 I remember it was $125 for a cordless drill. $225 for a miter-box. Adjusted for inflation both of those should be 4X as high today. But they are not.
How inflationary is the federal minimum wage rate?
Given that it has not increased in 11 years, I would posit ZERO.
Only people in Alabama are making that wage.
Where I live in the Socialist Paradise of the City & County of Denver, the market minimum wage is $13/hour.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
