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It's certainly possible that changing the minimum wage could have positive benefits for society as a whole, but the simple, "they'll have more money to spend so they'll spend more so the economy will be better" isn't the reason why. That's a shallow argument that misstates the role of money in an economy. Money is just a placeholder for all the stuff money can by. The health of the economy ultimately hinges on the productivity of its workers at extracting resources and creating goods and services. Simply multiplying every dollar value by 10 won't do anything to the economy except reduce the value of all money savings and dollar-enumerated debt.
Will increasing the minimum wage increase productivity? Will it reduce spending inefficiencies? Will it transfer utility from business owners to workers effectively? Will such a transfer have a positive effect on the total amount of goods and services available? Those are tougher questions to answer which is why it's still an actively debated topic, even among academic economists.
Agreed. Increased consumer spending is not my main reason for supporting a min wage increase. I bring it up as an aside to show that it is a complex issue. So many posters argue this topic based solely upon the thought that wage increases decrease profits, which reduces jobs. That is far too simplistic.
It's a pathetic way to live, I believe. How does one live a full life like that or raise kids or be involved with friends and family? I'm not saying a burger flipper should be paid what professional makes, but they should at least live a dignified life.
Fast food/retail is largely all part time work so they have no choice but to get other jobs. I have a friend who has worked for Walmart full time for 20+ years and has had his hours cut to 20 hours a week.
All that said, I do think it is time for a moderate increase in the minimum wage. Not up to $10/hour though.
Seems to me, a much smarter solution to this ever present debate, is to simply have a yearly increase. I would tend to favor a small automatic increase rather than one tied to some figure that a politico can massage to their own liking.
Agreed. We need to raise it. I would say that $10/hour is good, but I balk at the $15 figure that many use.
An automatic increase should be written into law. Link it to CPI or a similar measure. That would quite nicely eliminate uncertainty for businesses.
With that said, regarding your post, all other things you've discussed taken into account, how are we going to keep people alive at $7-something an hour without having to compensate them from taxpayer dollars for welfare services?
I mean, at the end of the day, we have to keep these people alive as they are doing A job, just like fishbrains stated.
I believe most of the heat in the MW debate comes from most people confusing the solutions to two very distinct and separate problems. This confusion is actively encouraged for political reasons at the moment.
Problem 1 - setting policy so as to encourage a healthy economy.
Problem 2 - setting policy so as to keep people alive.
I tend to fall in with the solve problem 1 crowd - because when done correctly, it also solves problem 2. When done incorrectly, it aggravates problem 2. Historically, I do not believe we have done such a good job of solving P1, yet attempts to solve P2 instead appear to me to have been more disastrous than our efforts with P1.
I tend to believe that the best role to be played by government in either case is regulatory, nothing more. People often need a bit of encouragement to stick to honest and fair dealing, it is too much to ask that they always come to the conclusion on their own that honesty is in their own best interests. Having a reasonable MW is definitely part of that, and raising it now and then is also part of that.
I have noticed however, that the current politico advocating the raise is talking louder about the ultimate total jump rather than emphasizing the stepwise nature of the raise. From this I conclude that he is primarily looking for votes rather than looking to solve either problem I've defined.
If he was emphasizing the graduated raise in the MW, and interested in compromising on the timing of the steps, he could reach a deal with the House GOP and get it done. Getting it done, however, does not get his allies votes. Providing a sharp distinction between his party and the other party gets votes for one or the other. The sharper the distinction the better for driving voters to the polls. This is the first time I recall seeing a politico do this in such a bald way, and frankly, this is no way to run a country.
You're not paid what you're worth. In a competitive market, you're paid what your WORK is worth. It's an important distinction. If you're Will Hunting, you're still getting paid like a janitor.
Probably the only thing wall street bankers and many minimum wage workers share is that they're being paid more than their work would be worth in a competitive market; the minimum wage workers because the government set a floor, and the wall street bankers because they collude to inflate the worth of their own work.
The idea that welfare is a subsidy for companies who employ those on welfare is attractive, but it doesn't really hold up. Companies are paying for labor, they're not paying their employees expenses. It may be true that if the welfare wasn't there, the cost of labor would rise. Or, it might be that the current minimum wage employees would work multiple jobs and cut expenses (e.g. by living 20 to a room). Either way, the welfare is a direct subsidy to the employees, not their employers.
If you do believe that the cost of the cheapest labor would rise above minimum wage without welfare, the thing to do is to actually cut the welfare; raising the minimum wage so people are paid "as if" there was no welfare is an odd way to go about it.
The article was about what I expected giving the source and the author. Populist sentiment that confuses the many meanings of the concept of worth. When someone says "you're paid what you're worth" they mean that you are compensated at approximately the market value for your services. It's not the value you create for the company, the intrinsic value your work brings to society, how skilled or educated you are, or how difficult your work is. Those things certainly influence the market value for your services--the more skilled you are the fewer there are that can compete, the more difficult the job the fewer that want to compete, and the, somewhat paradoxically, the more intrinsic value you bring to society the more people there are who want to do the same thing and the [i]lower[i] your market value.
When Robert Reich talks about worth in this article he uses it in a different sense, meaning the intrinsic value of that labor. From the article it's clear this is the kind of worth he's discussing:
Does this mean the typical GM employee a half-century ago was worth four times what today’s typical Walmart employee is worth? Not at all. Yes, that GM worker helped produce cars rather than retail sales. But he wasn’t much better educated or even that much more productive. He often hadn’t graduated from high school. And he worked on a slow-moving assembly line.
And that's pure populist sentiment. He's discussing worth in terms of how much market value the labor creates. I think that these calculations are often done incorrectly and almost always are misleading. In some cases the employee really does create that value, by himself, and so likely should be compensated as such. More often than not, though, he dramatically overvalues the worker's contribution to the process.
Let's say Mary invents a widget made of plastic that stores are willing to pay $10 for. Let's further say that the widget takes $1 in materials and one hour of labor to produce. For simplicity let's say that she rents the machines and factory space for $1000/hr and can make 1000 units per hour, so overhead also costs her $1/unit. Let's say she can hire a totally unskilled employee at minimum wage (for simplicity $10/hr) and they can make approximately 10 widgets per hour. Lets say marketing, sales, and transport are $1/unit. She would say that her invention and managerial skills are worth about $6 per unit, because that's the difference between what it costs her to make and what others are willing to buy the thing for.
One of her employees looks at his situation and thinks about it differently. Ten times an hour he takes $1 worth of materials and turns it into something worth $10, so he's effectively producing $90 an hour (or $60 if he thinks through other expenses and the cost of capital) but only getting 10 of the those dollars. He feels cheated and that he's not getting "paid what he's worth" and quits. Never mind that anyone could have done what he did and he is quickly replaced by someone else, he feels that he did the actual work and that's the important part. In a free and capitalist society, it's not.
Finally, there is the broad "societal worth" that people ascribe to certain activities they think are good but generally aren't willing to support with their own money. Teachers are a prime example. You'll often hear people wax poetic about how woefully underpaid teachers are. We could double teacher salaries tomorrow if we also doubled property taxes, but I suspect "you are underpaid" is all that they'll get in monetary compensation. They hopefully get considerably more in non-monetary compensation (such as pride in a rewarding job).
Just to prove that I read the article, I'd like to make a few more comments about it:
People who park their savings in these banks accept a lower interest rate on deposits or loans than they require from America’s smaller banks. That’s because smaller banks are riskier places to park money. Unlike the big banks, the smaller ones won’t be bailed out if they get into trouble
I'm sure Mr. Reich know that the FDIC insures even the smallest of banks. The linked articles indicate that the subsidies come from credit ratings from those who lend to those banks, not from "people who park their savings". I'm not sure why he misled with his simplified explanation. The whole argument feels like it's plucked from the, "how to make populist arguments even when they're not really that relevant" document.
To be at least a bit conciliatory, he may be right that CEOs are overpaid. It's easy to calculate if a minimum wage employee is overpaid, because there are so many of them. I suspect that once shareholders figure out that CEO pay isn't particularly correlated with performance it will come down (or perhaps they have figured out that it is and maybe CEOs aren't overpaid).
You're not paid what you're worth. In a competitive market, you're paid what your WORK is worth. It's an important distinction. If you're Will Hunting, you're still getting paid like a janitor.
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Truthfully, as people, none of us bring value to a business. Our work brings it value. There is absolutely nothing wrong with either of those facts.
You're not paid what you're worth. In a competitive market, you're paid what your WORK is worth. It's an important distinction. If you're Will Hunting, you're still getting paid like a janitor.
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Quote:
Originally Posted by bobtn
Truthfully, as people, none of us bring value to a business. Our work brings it value. There is absolutely nothing wrong with either of those facts.
This is a red herring. You are jumping in to try and define a term that doesn't need defining, and everybody already agrees on.
I am not advocating that I get paid based upon my charming personality and unfulfilled potential. The assumption is that we are talking about the jobs that people DO, not the jobs that they want to do.
Yes, pay should be based upon work performed. If a business does not use their employees to full potential that is a problem, but nobody us advocating pay based upon that measure.
I am an Engineer and the bonus structure at my company is extremely unfair:
Production workers 3.5%
Customer Service 8.5%
Engineers/Product Managers 13.5%
Managers 23.5%
Sales Managers 25% to 35%
General Manager 40% to 50%
Most production folks get around $1K to $2K, so my bonus is 13 times bigger than the low end of the production workers and the GM bonus is 100 times bigger.
No body suppose to know what other people get but it is common knowledge. Some of the Managers that get the big bonuses along with their high pay are worthless to the company. It seems like the only thing they do is hanging out with the GM and play golf and go sailing with him.
Word!
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