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And the fact that people with college degrees are accepting jobs for less than $15 an hour is exactly why it is necessary to push wages up.
Which method do you propose?
a) cut down on the number of spots in college so that only the mentally gifted with proven initiative attend?
b) eliminate college degrees such as "Gender Studies" and "Basket Weaving"?
c) have the government determine exactly how many people will be allowed to graduate each year?
"The Economic Policy Institute is an American think tank affiliated with the labor movement. EPI presents a liberal viewpoint on public policy issues."
That is, EPI is far from an unbiased source. They have a far-left, progressive point of view. They start with their conclusion. They do not employ the scientific method.
2sleepy --
The graphic you post regarding "who benefits from a higher MW" is from the Economic Policy Insitute. https://en.wikipedia.org/wiki/Economic_Policy_Institute
"The Economic Policy Institute is an American think tank affiliated with the labor movement. EPI presents a liberal viewpoint on public policy issues."
That is, EPI is far from an unbiased source. They have a far-left, progressive point of view. They start with their conclusion. They do not employ the scientific method.
They are not credible.
Really..you consider Wikipedia a good source of information? Here is the supporting data. EPI doesn't publish stuff that isn't sourced:
Using your example. The fair market wage is $X. The new minimum wage is $(X+D). This is no more or less of a tax than the bottom being dinged with the inflation tax is. If you can't pay $(X+D) and make a profit then get out of the way of someone that can.
It is a tax on the employer and subsidy to the employee. The employee most certainly didn't earn $(X+D) - the employee only earned $X and is given $D that the employee did nothing to earn.
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It is the business of the government to assign the allocation of resources.
Nope. There are indeed countries on the planet with centrally planned economies --North Korea and Venezuela come to mind.
The United States Constitution articulates the powers of the Federal Government, and assigning the allocation of resources for the economy is not one of them.
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Do some math. We have how big of a workforce? We have what size of obligations? SSI Medicare, Defense etc. So we have need what % of the workforce to be employed and at what compensation rate to cover our obligations. This entitles the government to set the minimum wage accordingly.
Your conclusion does not follow from the premise.
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Capital is printed for the continence of all of us.
Currency is printed, not Capital.
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The efficient allocation of capital is a matter of opinion.
Nope -- anymore than "2+2" is a matter of opinion.
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Capital-ISM is just the worship of money.
Nope. It is an economic system that allows for the efficient allocation of capital and scarce resources in a world of unlimited wants & desires and scarce outputs.
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Calling an increase in the minimum wage a tax and a subsidy and a distortion of the efficient allocation of capital, represents a political agenda.
If it walks like a duck, and quacks like a duck...
I read through the rest of your post. Rather than respond to it, I think you and I can agree that:
a) My arguments are not convincing to you
b) Your arguments are not convincing to me
c) Regardless of (a) and (b), the Minimum Wage indeed is going up in certain jurisdictions.
In a few years, perhaps we will have economic studies that can give us all policy recommendations one way or the other.
Speaking of the middle class...if minimum wage workers make $15hr, and costs go up (which they will) that's less money out of their pocket.
Should there also be a law to raise the wages of "middle class workers" too?
Where's their increase?...
Costs have been going up far before MW has been going up, so this argument is meaningless.
It's only meaningless if one doesn't realize that a huge hike in the minimum wage will accelerate costs much higher than the status quo.
In Los Angeles for example today the minimum wage is $10hr, in just four years it will be $15hr..that's a 50% jump in 4 years.
Yes there is inflation and a rise of cost but it hasn't been that high.
If the minimum wage was being raised at the same rate of inflation, then it would be a different story.
It's only meaningless if one doesn't realize that a huge hike in the minimum wage will accelerate costs much higher than the status quo.
In Los Angeles for example today the minimum wage is $10hr, in just four years it will be $15hr..that's a 50% jump in 4 years.
Yes there is inflation and a rise of cost but it hasn't been that high.
If the minimum wage was being raised at the same rate of inflation, then it would be a different story.
Good point. While I don't think economic *history* supports the projections by some here that increasing MW will result in significant inflation and loss of jobs, a sudden sharp increase upsets and shocks the system. Sudden changes of any kind create issues.
You really think so? My short version of the problem is that a critical mass has emerged of adults earning minimum wage and having difficulty living on that wage because the rent is too high. According to Mortgage News Daily, half of all low-income renters spend at least half their income on shelter.
I see housing, rents, and minimum wage inextricably connected. Short of government intervention, only a massive increase in housing supply will resolve the problem, and short of government intervention, the only way to adequately increase supply is drastic deregulation.
Because they have an income problem, not a rent problem. You pay sub-market rent because you live in a flop house, yet you have a hard time living on that wage. At what point will you finally admit that you have an INCOME problem (and I don't mean "I would have a six figure income if I only could sell chachkies on eBay")?
It is a tax on the employer and subsidy to the employee. The employee most certainly didn't earn $(X+D) - the employee only earned $X and is given $D that the employee did nothing to earn.
Let us say A needed to be done. There are B number of people qualified to do A. There are C number of opportunities to do A. If C is large and B is small then X is large. If B is large and C is small the X is small. E is the lower limit on wages that can be paid by statute, the minimum wage, then if X is smaller than E then don't do X. No tax. You said there are no needs in economics only wants. If you don't want to do A for E when E is larger than X then don't do it!!!! If you want A done bad enough to pay E when E is larger than X then pay E and get A done. If all you care about is making money then find something else to do besides A that is worth more than E.
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Originally Posted by SportyandMisty
Nope. There are indeed countries on the planet with centrally planned economies --North Korea and Venezuela come to mind.
China does come to mind with me, although they aren't as rigidly controlled as they once were.
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Originally Posted by SportyandMisty
The United States Constitution articulates the powers of the Federal Government, and assigning the allocation of resources for the economy is not one of them.
Governing interstate commerce is one of them And they have decided that if you want to take part in interstate commerce you need to pay your workers $7.25hr or more. Under most circumstances.
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Originally Posted by SportyandMisty
Your conclusion does not follow from the premise.
Really. The government of the US of A has obligations, it is their responsibility to meet those obligations. Setting taxes to raise the revenue to cover those obligations is their responsibility. You've called the minimum wage a tax. Setting that tax high enough to generate the necessary revenue is their responsibility
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Originally Posted by SportyandMisty
Currency is printed, not Capital.
True, and an over simplification.
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Originally Posted by SportyandMisty
Nope -- anymore than "2+2" is a matter of opinion.
What you value, what you want to spend your money on is a matter of opinion. What is efficient is subjective not absolute. If I'm making widget F and something comes along the makes widget F useless then letting that something go to market is very inefficient for me. But if that something costs far less and requires far less from the user then letting it go to market is far more efficient for everyone else.
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Originally Posted by SportyandMisty
Nope. It is an economic system that allows for the efficient allocation of capital and scarce resources in a world of unlimited wants & desires and scarce outputs.
It has the potential to efficiently allocate resources, limits and
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Originally Posted by SportyandMisty
If it walks like a duck, and quacks like a duck...
Honk Honk, Ooops what is good for the goose is good for the gander.
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Originally Posted by SportyandMisty
I read through the rest of your post. Rather than respond to it, I think you and I can agree that:
a) My arguments are not convincing to you
b) Your arguments are not convincing to me
c) Regardless of (a) and (b), the Minimum Wage indeed is going up in certain jurisdictions.
In a few years, perhaps we will have economic studies that can give us all policy recommendations one way or the other.
It is interesting that you didn't respond to my counter argument.
Your argument is that the economic cost of raising the minimum wage is higher than the alternative. My argument is that the economic cost of not raising the minimum wage is higher than the economic cost of raising it. I am not saying that there is no cost to raising the minimum wage. I'm saying that the cost of doing that is the lowest cost option going forwards, that resources have been misallocated and upping the minimum wage gets them closer to an appropriate allocation.
An interesting observation from a former CEO of McDonald's regarding their business model:
Among those opposing the wage hike is Ed Rensi, the former president and CEO of McDonalds. He wrote about the effect that a $15 minimum wage would have on his old company in Forbes on Monday, suggesting that:
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…a $15 minimum wage won’t spell the end of the brand. However it will mean wiping out thousands of entry-level opportunities for people without many other options.
He explained why:
"The $15 minimum wage demand, which translates to $30,000 a year for a full-time employee, is built upon a fundamental misunderstanding of a restaurant business such as McDonald’s”
In truth, nearly 90% of McDonald’s locations are independently-owned by franchisees who aren’t making “millions” in profit. Rather, they keep roughly six cents of each sales dollar after paying for food, staff costs, rent and other expenses.
Then he does the math, which will leave entry level workers in a bad spot:
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“A typical franchisee sells about $2.6 million worth of burgers, fries, shakes and Happy Meals each year, leaving them with $156,000 in profit. If that franchisee has 15 part-time employees on staff earning minimum wage, a $15 hourly pay requirement eats up three-quarters of their profitability. (In reality, the costs will be much higher, as the company will have to fund raises further up the pay scale.) For some locations, a $15 minimum wage wipes out their entire profit.”
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If you want A done bad enough to pay E when E is larger than X then pay E and get A done. If all you care about is making money then find something else to do besides A that is worth more than E.
