Greed is Good (Fodder for a broad discussion of economics :))

[barrett]

My guess is that the more recent the data, the more it will tend to support tech's view. Older data would more likely support jafs' view. My reasoning is that the pace of automation is picking up. A big jump in the minimum wage will result in an ever quickening reduction of low-wage jobs. I wish it weren't that way because I think anyone who is willing to work a big chunk of hours should be able to earn a living wage. But that's not the world we live in and I don't think there is any turning back.

[Jake]

That's a highly ideological view, and the studies I've seen don't support it.  What they seem to show is a very small reduction in jobs, and many other gains for those at the bottom of the socio-economic scale, and also for those above that, as the folks at the bottom spend more of their money, which circulates in the economy.

If we can enforce higher wages without reducing the supply of jobs, why not set the minimum wage at $1 million? When I ask people who believe minimum wages defy basic economics, the response is usually something along the lines of "that's just silly". They concede that "much" higher prices reduce demand. I guess they must be so experienced in business that they know exactly how high they can set wages without influencing employers at all.

[jafs]

Because the idea of minimum wage isn't to make low skilled workers millionaires - it's to ensure that they can support themselves at a modest standard of living.

And, it's obvious that small increases won't have the same effect as large ones.

Those at the bottom of the economic ladder spend a lot of their income, so small increases in their income usually result in more spending, which stimulates the economy - I believe that's why small minimum wage increases don't hurt businesses.

The logic of "if a small increase is good, why isn't a large increase good" is flawed in other areas as well - many people would be better off drinking a bit more water, for example, but not huge amounts more.

I'd say that minimum wage should be set at a level which allows full-time workers to support themselves, living in smaller apartments (but on their own if they want) with basic necessities and some extras, paying for all of their needs without needing government assistance.  And it should be indexed to inflation (if the ways we measure inflation are good enough).

[Tyler]

Because the idea of minimum wage isn't to make low skilled workers millionaires - it's to ensure that they can support themselves at a modest standard of living.

And, it's obvious that small increases won't have the same effect as large ones.

Those at the bottom of the economic ladder spend a lot of their income, so small increases in their income usually result in more spending, which stimulates the economy - I believe that's why small minimum wage increases don't hurt businesses.

The logic of "if a small increase is good, why isn't a large increase good" is flawed in other areas as well - many people would be better off drinking a bit more water, for example, but not huge amounts more.

I'd say that minimum wage should be set at a level which allows full-time workers to support themselves, living in smaller apartments (but on their own if they want) with basic necessities and some extras, paying for all of their needs without needing government assistance. And it should be indexed to inflation (if the ways we measure inflation are good enough).

the full time job is rapidly becoming a thing of the pas as well... in order to avoid regulatory costs ( obama care etc) retail and other entry level jobs are now all <20 or <29 hrs per week, you can support yourself on min wage (basic necessities, some extras, cover needs without assistance) but not without sound financial management, some ERE type habits and two or three jobs.*.

*and a strong work ethic.. there is little need to keep the lazy or slow worker employed, the unemployment level means replacements are easy to find.

Interesting you mention ERE.  I think the new post-job environment actually plays in its favor.

One of my fears as a very early retiree was the idea of locking myself out of my former career should I ever want to dabble in it again.  Companies used to heavily prefer full time employees that they had more control over, but I quickly found that many companies today are more than happy to have you work part time as it benefits them as well.  These days I'm working permanent 3-day weeks at a healthy hourly wage with the ability to take as much time off as I like.  What others may see as a loss of guaranteed hours, I see as a gain of personal control.

Of course, that's mostly a benefit to those who have already saved enough to be able to afford to have it work in their favor.  Good money management opens doors. 

[jafs]

the part time job is starting to creep up the job hierarchy as well, (at least in retail) supervisors who only make 1 or 2 bucks an hour more than the minimum wage and are required to be available full time are now getting the same <29 hrs per week as the entry level jobs. i just witnessed the min wage rise in CA, and guess what? they hired far less Christmas seasonal staff than the year before, i find it hard to believe that a raising min wage on jan 1st wasn't a factor...

I don't think people should have to work 3 20 hr/week jobs just to support themselves.

It's just one of my values, that people should be able to work one full-time job (or the equivalent) and support themselves.  They should also be treated with basic respect/dignity.

[WiseOne]

So I did a bit of searching, and it turns out that the studies claiming that raising the minimum wage won't affect the number of jobs are all reported by groups in favor of increasing the minimum wage.

If you look for non-biased sources, you find a different story:

President Obama's call to raise the federal minimum wage could help lift 900,000 workers out of poverty, but at a cost of as many as 500,000 jobs, according to an analysis released today by the non-partisan Congressional Budget Office.

http://www.usatoday.com/story/news/poli ... s/5582779/

I don't see how it can be any other way.  Money doesn't grow on trees - it has to come from somewhere.  Assuming most businesses are already pretty efficiently run, there are only 3 things you can do: reduce the workforce, cut benefits (if any), or increase prices.

I assume that part-time workers are still subject to the minimum wage, but they're cheaper if you can avoid paying them benefits.  So yes, I expect a possible strategy would be to reduce the number of full time jobs and hire part-time instead.

[jafs]

There are a lot more studies showing minimal job losses, and that CBO report is controversial.

Not sure I'd assume that most businesses are efficiently run.  And, one possible benefit of higher minimum wages is that they'd improve employee performance/satisfaction and reduce turnover.

Sure, the money has to come from somewhere.  One obvious place is for large corporate CEO's to take minimal pay cuts and distribute that money down the line to lower level employees (most of them won't do that voluntarily, but it certainly could be done).

Also, if labor is a relatively small part of overall costs, we can increase minimum wages and a small increase in overall costs would still not outweigh that wage increase, so the folks at the bottom would still be better off than they are now.  There are studies showing that a 10% increase only results in a 4% increase in prices.

And, again, as folks at the bottom tend to spend what they make, as they get a bit more money, they spend it, which creates more business for businesses, often the same ones that employ those folks (people working at Wal-Mart don't go shopping on Rodeo Drive).

I'm sure you're right that businesses may try a variety of strategies in response to any changes like raising minimum wage, and we'd have to keep working to ensure that our goal is met.  It's kind of like anti-virus software - you can't just get it and forget about it - as hackers develop newer and sneakier viruses, your software has to be updated and improved.  As long as we live in a capitalist society in which profit is prized above all by most businesses, if we want to create a more just society, we have to think of it as an ongoing process.

[jafs]

Does anybody else watch "Undercover Boss"?  We watch it occasionally, and I'm always surprised by a few things:

CEO's seem incredibly out of touch with what's happening at "ground level" in their businesses.
They're often surprised that people working for very low wages work hard/well and struggle to make ends meet.
People at the lowest levels often have a remarkable work ethic and loyalty to the company.
Policies often seem very stingy to me - I remember one place that paid a "manager" something like .80/hr more than staff they supervised.

I like that the bosses reward the employees on the shows with help of various kinds, but the whole thing reminds me a bit of feudal times, with peasants dependent on the generosity of royalty.  I'd much prefer that people are just paid enough to support themselves without needing that kind of help.

I've known for a long time that it's often the lower level employees who make the difference for customers between a good experience and a bad one.

[jafs]

There's a software company out of one of the Carolina's I believe that runs more the way I'd like.

The CEO makes somewhere between $500K and $1 million/yr., pays and treats his employees very well - the company is successful, with high employee morale and low turnover, and everybody's doing quite well.

If more companies were structured this way voluntarily, we wouldn't need regulations of various kinds, which would be great.

[Libertarian666]

There's a software company out of one of the Carolina's I believe that runs more the way I'd like.

The CEO makes somewhere between $500K and $1 million/yr., pays and treats his employees very well - the company is successful, with high employee morale and low turnover, and everybody's doing quite well.

If more companies were structured this way voluntarily, we wouldn't need regulations of various kinds, which would be great.

We don't need those regulations.

Actually, that's way too soft.

Those regulations interfere with voluntary agreements, so they are evil.

[Mountaineer]

I hesitate to dip my toe in this shark infested water, but my perspective is focusing on the minimum wage is the wrong thing to do.  It reminds me of focusing on the gun rather than misuse of the gun, that is focusing on the wage rather than the wage earner.  The question is, "Why do the people making minimum wage do so; why are they not making more?".  Are they stuck in a minimum wage job for life, or is it merely a stepping stone while they are studying 40 hours/week in school?  Are they intelligent enough to earn more?  Do customers want to pay more?  In my opinion, giving a bigger hand out is not the same as figuring out how to give a hand up.  Said another way, I believe an effective organization knows the relationship between processes, systems, and structures - i.e. ready, aim, fire.  It is altogether too common for people to want a fire first strategy - action baby - as it looks like something productive is being done.  Wrong!  Until the processes and systems are understood, putting a structure in place (the 'fire' part) likely will bring on far more unintended consequences than can be envisioned ... no matter how much 'do good' is intended at the outset ... and the target will be missed.  I certainly do not pretend to know how to solve world hunger, or how to get those on the bottom of the scale elevated, but I do know that until the root causes are identified and solved, throwing money away is not likely the answer.  In my previous work, I saw too many examples of what altruistic managers failed to accomplish when ignoring human nature and just wanted to be good guys.  Even worse, one smart guy or bunch of guys thinking he/they know best (e.g. wage or price controls) is really, really, really bad.

... Mountaineer

[MediumTex]

jafs,

Where does a woker's skill level enter into your analysis of what they should be paid?

It seems to me that what we should be talking about is how to give working class people more valuable skills, not how to force employers to pay working class people more than the labor market would otherwise support based on their current skill level.

It's also important to remember that we are talking about private property here, and it doesn't seem unreasonable for the owners of a private company to expect that they can decide how to run their business, including which products to carry, where to buy them, and what type of staffing and compensation practices they are going to follow.

There are some legitimate philosophical crosswinds in this discussion.  When the actions of private interests individually don't add up to things we think of as common public goods, it creates the same dissatisfaction that happens when political leadership makes a lot of noise about an issue, but never really delivers any improvements in society.

I've always thought that a prudent business owner would be one who realized that the proper minimum wage is somewhere above the level that would lead to a mob of unemployed people burning down his house in the middle of the night.  History shows us over and over that the poor are meek to a point, but once they have nothing to lose they can be all too happy to see their entire society burned to the ground.

[jafs]

After and on top of a basic minimum wage that can be lived on.

Any employee who is willing to work 40 hrs/week and does an acceptable job deserves to get paid enough to live on, in my view.  If they are better than acceptable, then they can/should be compensated above that level.

Corporations are publicly created and sustained entities, created by our legal system, so we can define their rights/responsibilities however we want to, as far as I can tell.  It's a bit different with small, non-incorporated businesses.

I agree with your idea to help train working class folks so that they have more options, but businesses will always need people at the lowest level to fulfill basic functions (unless we do get robots doing all of that eventually  ), so they're not mutually exclusive options.

Traditionally, minimum wage jobs were entry-level and stepping stones to better opportunities, but we've seen that change over time.  People are working at minimum wage levels (and slightly above that) because employers can get away with it.  Even if they were stepping stones, I'd still argue for a basic minimum wage that was enough to live on.

[Pointedstick]

After and on top of a basic minimum wage that can be lived on.

Any employee who is willing to work 40 hrs/week and does an acceptable job deserves to get paid enough to live on, in my view.

Does the nature of the work matter, in your view?

People are working at minimum wage levels (and slightly above that) because employers can get away with it

In other words, because there is an oversupply of entry-level labor relative to demand for it, giving employers the upper hand. Why might there be such an imbalance? Let's brainstorm reasons.

[MediumTex]

In other words, because there is an oversupply of entry-level labor relative to demand for it, giving employers the upper hand. Why might there be such an imbalance? Let's brainstorm reasons.

Alex, what are international trade agreements that are entered into in secret by unelected officials that mostly benefit the economic elite?

[MediumTex]

When we are talking about low-skilled workers in this country, we are talking about a lot of minorities, and for whatever reason our education system doesn't seem to help poor minorities get much of an economic start in life.

Maybe our education system doesn't do much for poor whites, either, but its ineffectiveness seems more pronounced in minority communities.

[MediumTex]

After and on top of a basic minimum wage that can be lived on.

What if the work some unskilled workers do is worth less than the minimum wage rate?  Should employers be required to keep such employees on the payroll at a loss?

Any employee who is willing to work 40 hrs/week and does an acceptable job deserves to get paid enough to live on, in my view.

Does the value the employee provides to the employer enter into it?  It sounds like you are describing personnel policies for a government agency, not an entity with the pressure to make a profit.

Corporations are publicly created and sustained entities, created by our legal system, so we can define their rights/responsibilities however we want to, as far as I can tell.  It's a bit different with small, non-incorporated businesses.

Giving corporations the benefits associated with incorporation doesn't provide an obvious rationale in my mind for the government to tell corporations how much they should pay their employees.  Why not just let the market decide compensation levels?  That's mostly what we do with other products and services and it tends to deliver the best product or service at the best price.  Why not do the same thing with labor?

I agree with your idea to help train working class folks so that they have more options, but businesses will always need people at the lowest level to fulfill basic functions (unless we do get robots doing all of that eventually  ), so they're not mutually exclusive options.

Would you be in favor of an anti-robot law if you knew for certain that robots were putting people out of work?

Traditionally, minimum wage jobs were entry-level and stepping stones to better opportunities, but we've seen that change over time.  People are working at minimum wage levels (and slightly above that) because employers can get away with it.  Even if they were stepping stones, I'd still argue for a basic minimum wage that was enough to live on.

Why can employers get away with it?

Because the U.S. government has used its power to create easy access for U.S. corporations to access cheap foreign labor markets and to create illegal foreign labor markets here in the U.S.

[jafs]

After and on top of a basic minimum wage that can be lived on.

Any employee who is willing to work 40 hrs/week and does an acceptable job deserves to get paid enough to live on, in my view.

Does the nature of the work matter, in your view?

People are working at minimum wage levels (and slightly above that) because employers can get away with it

In other words, because there is an oversupply of entry-level labor relative to demand for it, giving employers the upper hand. Why might there be such an imbalance? Let's brainstorm reasons.

No - anybody who's willing to work full-time and does an acceptable job should be able to support themselves.

Minimum wages that are too low, plus the busting of unions nationwide, plus policies that favor those at the top relative to the rest of us are all factors that give employers the upper hand.  When those at the top are able to run things into the ground, making terrible decisions and still walk away with multi-million severance packages, they have little incentive to really care about how the company does.

[jafs]

After and on top of a basic minimum wage that can be lived on.

What if the work some unskilled workers do is worth less than the minimum wage rate?  Should employers be required to keep such employees on the payroll at a loss?

Any employee who is willing to work 40 hrs/week and does an acceptable job deserves to get paid enough to live on, in my view.

Does the value the employee provides to the employer enter into it?  It sounds like you are describing personnel policies for a government agency, not an entity with the pressure to make a profit.

Corporations are publicly created and sustained entities, created by our legal system, so we can define their rights/responsibilities however we want to, as far as I can tell.  It's a bit different with small, non-incorporated businesses.

Giving corporations the benefits associated with incorporation doesn't provide an obvious rationale in my mind for the government to tell corporations how much they should pay their employees.  Why not just let the market decide compensation levels?  That's mostly what we do with other products and services and it tends to deliver the best product or service at the best price.  Why not do the same thing with labor?

I agree with your idea to help train working class folks so that they have more options, but businesses will always need people at the lowest level to fulfill basic functions (unless we do get robots doing all of that eventually  ), so they're not mutually exclusive options.

Would you be in favor of an anti-robot law if you knew for certain that robots were putting people out of work?

Traditionally, minimum wage jobs were entry-level and stepping stones to better opportunities, but we've seen that change over time.  People are working at minimum wage levels (and slightly above that) because employers can get away with it.  Even if they were stepping stones, I'd still argue for a basic minimum wage that was enough to live on.

Why can employers get away with it?

Because the U.S. government has used its power to create easy access for U.S. corporations to access cheap foreign labor markets and to create illegal foreign labor markets here in the U.S.

If somebody doesn't do an acceptable job, they can be fired.  Otherwise, they deserve enough to live on - it's a basic human dignity thing for me.

Because the market doesn't care about people, and I do.

That's a hard question for me to answer - technology has improved our standard of living in a lot of ways.  But people need jobs.  If they can't be trained enough to adjust to new job markets, then they suffer.

[Xan]

jafs, all you'll succeed in doing is preventing people from being hired at all.  Why should I hire somebody if I have to pay more than he's worth?  You'll eliminate the entire class of entry-level jobs, which teach teenagers and others how to work, and also teach them that they probably don't want to be in entry-level jobs their whole life.

[MediumTex]

jafs, all you'll succeed in doing is preventing people from being hired at all.  Why should I hire somebody if I have to pay more than he's worth?  You'll eliminate the entire class of entry-level jobs, which teach teenagers and others how to work, and also teach them that they probably don't want to be in entry-level jobs their whole life.

IMHO, the only way you fix the problem is to have policies that protect American workers and provide Americans with access to the resources they need to be hired into jobs that pay enough for them to survive.

What we have now is university-level education that requires young people to be become debt slaves and a fascination with trade deals and immigration policies that seem focused on finding ever-more creative ways to screw American workers.

I think that big labor can be an obnoxious force in society, but I think that an effective organized labor movement can be an effective check on some of this clandestine economic molestation of working people.

Some of the U.S.'s strongest economic expansion has occurred under the tension of big corporate and big labor interests.  I think that it's a healthy thing.  What we have now seems to be trending more toward a feudal arrangement where we entertain ourselves with shows about clueless CEOs sprinkling breadcrumbs to brighten the dreary workplace their greed has created.  It seems unhealthy.

It's important to concede, too, that I think "trickle down" economics has worked to some extent.  It's just that not nearly as much prosperity has trickled down as people might have imagined back in the 1980s.  It's certainly ridiculous that a country as rich as ours has as many people who are poor, uneducated, and without access to something as basic as healthcare, even after the debacle of Obamacare, which has still left millions without coverage.  That's messed up.

[Xan]

A citizen's dividend is something worth seriously looking into.  Assuming it comes at the benefit of dropping a LOT of regulations and programs, such as minimum wage, welfare, etc, AND assuming it could be worked out who's a citizen, then it solves the poverty problem without creating a lot of distortions.

[MediumTex]

A citizen's dividend is something worth seriously looking into.  Assuming it comes at the benefit of dropping a LOT of regulations and programs, such as minimum wage, welfare, etc, AND assuming it could be worked out who's a citizen, then it solves the poverty problem without creating a lot of distortions.

Isn't that what the majority of Social Security disability benefits amount to?

Another easy fix along the lines of a citizens dividend is to simply cut the payroll tax.  That puts money back into the pockets of anyone with a job who is making less than the FICA wage cap.  What would be an interesting thing to do would be to flip the current arrangement so that rather than only paying payroll taxes up to the wage cap, you would only pay payroll taxes on income OVER the wage cap.  I think that a lot of Americans probably have no idea that FICA withholding stops when you hit the wage cap, which means that the marginal tax rate for high earners when you include payroll taxes is 6.25% LOWER than it is for working class people and other people in the under-$100k group.

It's interesting how the Presidential candidates rarely talk about the payroll tax when talking about their tax plans.

[jafs]

Determining what an employee is "worth" isn't an objective assessment.  I say that anybody working a full-time job is "worth" enough to live on.  Think about it - what are the alternatives?  Paying somebody little enough that they have to work 60 hrs/week just to get by, with two jobs?  Sounds sadistic to me.  Or needing government assistance programs to supplement full-time worker income, which is also less desirable.

Teenagers working part-time jobs are in a different group, clearly.

And, unless there are a lot of better jobs up the ladder, many people get stuck in low wage jobs their whole life these days, so they're not just "entry-level" any more.  I'd also be in favor of policies that made sure there were better jobs available and improved socioeconomic mobility.

A citizen's dividend wouldn't eliminate poverty unless it were pretty high, I would think, and has the undesired (to me) element of helping people who don't need help. 

"I say that anybody working a full-time job is "worth" enough to live on" [/b]it just sounds like a wonderful and Utopian theory, unless you have worked along side a min wage worker recently, the kind of old fashion work ethic and knowhow that justifies they make that kind of money isn't there anymore, what is needed is a scaled or tiered wage rates, getting hired doesn't make you worth a living wage, but if you get the job done and show some skill, you will soon earn a living wage, if you stick around and show some loyalty to the employer you can pick up some amount above living wage and if you excel you get promoted... unfortunately minimum wage laws, regulatory pressures, education system failures and immigration don't support or promote a tiered system in any way ...they do the opposite.... there is an endless stream of sub-par workers to hire from, few of which are worth the amount or minimum wage employers are forced to pay now.... So they just churn through the large pool of riffraff who can barley work... if at all... hoping they can find/put together a small core of decent workers who are desperate enough to keep making the effort who will keep things functioning. They then skim the rare cream from that group to supervise the rest, at a wage that is barely above what the lousy worker makes, because they have an endless supply to churn through so even a decent worker or one capable of supervising is still infinitely replaceable...

[Xan]

I say that anybody working a full-time job is "worth" enough to live on.

I say that's pretty asinine.  As an employer, if I would have to pay more to an employee than the value he brings in, then I simply won't hire him.  We've now found the objective value for how much an employee is worth.

A citizen's dividend wouldn't eliminate poverty unless it were pretty high, I would think, and has the undesired (to me) element of helping people who don't need help.

Well, it could be pretty high.  The amount of a citizen's dividend (as opposed to "basic income") is set by how well the economy is doing.  In other words, if there's unemployment as a result of people not being needed to do jobs, then the dividend is high.

And the idea of helping only people who need help is one of the primary things that's wrong with social assistance.  THAT is what locks people into poverty.  Why exactly would you give people DISINCENTIVES to lift themselves up by their bootstraps?  Why would you train people that diving in and being entrepreneurial is the wrong thing to do?