A Minimum Wage Equals Minimum Jobs

The unseen costs of minimum wage laws

John Stossel | July 30, 2009

The media are never better at displaying their economic illiteracy than when they report on the minimum wage.

"Workers got a raise on Friday when the federal minimum wage was hiked 70 cents to $7.25 an hour," the Christian Science Monitor reported last week. "They'll be shouting, "Olé!"

They assume that if politicians declare that workers should get a raise, they will actually get it. But the idea that government can increase wages by decree with only good consequences rests on a serious economic fallacy: that employers set wages arbitrarily. If wages are very low, it must be that employers are stingy.

Actually, employers are stingy; they want to pay workers as little as possible, just as workers want to be paid as much as possible. But in a market—even a government-hampered market like ours—employers' wishes are tempered by the reality of competition. So even if an employer wants to pay workers who produce, say, $4 worth of value an hour only $2 an hour, he won't be able to. Someone else will hire them away for $3 or more.

Some clueless politicians want to "help" workers further by requiring a "living" wage, a minimum well above the national minimum. After all, it's hard to live on $7.50 an hour.

Several years ago, the city council of Santa Monica, Calif., decided to make the town a workers' paradise by passing a union-backed law requiring everyone to be paid at least $12.25 an hour.

At the time, restaurant owner Jeff King complained to me that that law would "dry up the entry-level jobs for just the people they're trying to help."

He was right. It's why gas stations no longer hire teenagers to wash your windshield. Wage minimums tell employers: "Don't give a beginner a chance."

Such losses are hard to see, but they are widespread. One company closes because it can't afford to pay higher wages. Another decides to produce its product with fewer workers, and another never expands. Perhaps most importantly, there's the business that never opens. The people who were never hired don't complain—they wouldn't know whom to blame—they don't even know that they were harmed. They are the unseen victims.

The good news is that the people of Santa Monica woke up and overturned the "living wage."

The bad news is that more than a hundred other living-wage ordinances have passed.

In Washington, D.C., companies that get $100,000 or more in government contracts are required to pay employees at least $11.75 per hour. In Manchester, Conn., they must pay at least $14.

If minimum-wage advocates really believe wages are set arbitrarily, why do they favor only a $7.50 or $14 minimum? Why not $100?

At those levels, even a diehard interventionist knows that workers would be hurt. But the principle is the same at lower levels. If wages are a function of productivity, not whim, then it follows that if the minimum wage is set above workers' productivity, those workers—the intended beneficiaries of the legislation—will be harmed.

The Law of Unintended Consequences strikes again. Well, let me correct that. For some minimum-wage advocates, the bad consequences are not quite unintended. Consider the support for the minimum wage from large companies like Wal-Mart and organized labor. Why do they want the minimum raised? Economist Alex Tabarrok of George Mason University answers, "[T]hese employers will benefit from an increase in the minimum wage because it will raise the costs of their rivals. This is why unions have typically been in favor of the minimum wage even when their own workers make much more than the minimum."

Comments

Anonymous|7.30.09 @ 12:23PM|#

When will we learn what workers need is not meddling politicians but free and competitive markets?

Anyone who truly wants to help workers achieve higher living standards will work to remove all government barriers to peaceful, consensual economic activity.

This is precisely correct. But more importantly, I don't think the interventionists would dispute it, off the record.

Their goal is maximizing equality, which a socialized market can hope to do -- not maximizing utility, which a market trends toward. Poverty and death is a much simpler way to do that, and that's not even taking into account the effects of a standing military-police or aristocratic-style edicts.

Congress|7.30.09 @ 12:23PM|#

"Anyone who truly wants to help workers achieve higher living standards will work to remove all government barriers to peaceful, consensual economic activity."

Exactly what we've done by replacing the outdated minimum wage!! What do you people want from us?!

24AheadDotCom|7.30.09 @ 12:23PM|#

Thank you, thank you, thank you! As I've said for a long time now, economic liberty is the purest form of liberty of all. And, not all of what I said was funded by Exxon (I kid!)

Using the Cato Guidelines as a guide, let me discuss some of the other issues involved in bringing true liberty to the U.S.:

- imposition of the "serf" system, correcting the flaws in the systems used in Russia and elsewhere...
- the use of private workhouses...
- importing low-wage Third World workers in order to raise the wages of low-wage U.S. workers in some way to be specified much later...
- an economy based around cotton and other row crops...
- a return to good old Victorian times and values...
- letters of marque and reprisal, just because they sound "cool" (youth outreach).

I believe these commonsense proposals will meet with widespread support among the residents.

Xeones|7.30.09 @ 12:26PM|#

Shut the fuck up, LoneWacko.

Jonathan Finegold Catalan|7.30.09 @ 12:31PM|#

I don't think that the excerpt published here captures the logic that drives minimum wage. I think that the idea is that wages are not congruent with the aggregate profit of the company they are working for, so they believe that overtime there will be a rising disparity between the workers and the "capitalists".

So, there is a government drive to increase the minimum wage level, believing that by doing so they will "stimulate aggregate demand" (well, at least these were the original intentions during the 1930s), or at least make the workers be able to afford more (although, empirical evidence shows that while monetary wages increased, real wages decreased). Or, otherwise, believing that the businesses can afford the higher wage prices, because the original wages were not in any way related to corporate profit and productivity.

There is little understanding that although to some degree employers would enlarge their wage budgets as much as possible (if they can, to see if they can temporarily survive the uncertainty and see if they can increase productivity in some fashion), in reality the employers will cut hours and fire those who are less productive. Every dollar that someone makes over the market price for their labor is a dollar that somebody else does not make.

|7.30.09 @ 12:41PM|#

Quite punctual of you, Xeones. I'm glad we didn't have to get halfway through the thread this time.

And I seriously have no idea what the fuck LoneWacko is talking about, but I guess that's normal as well.

John|7.30.09 @ 12:52PM|#

Why stop at $7.25? If we only passed a law raising the minimum wage to $100 an hour, we'd all be rich!

Neu Mejican|7.30.09 @ 12:58PM|#

But the idea that government can increase wages by decree with only good consequences rests on a serious economic fallacy: that employers set wages arbitrarily.

I think that is an inaccurate framing for this issue.

The assumption behind minimum wage laws, as I understand it, is that employers set wages strategically to maximize benefits for the employer by minimizing the cost of labor without considering the consequences this has for the worker. The minimum wage law is an attempt to force employers to consider the consequences for the worker.

In no way does this rest on an assumption that employers set wages arbitrarily. Quite the opposite.

|7.30.09 @ 1:08PM|#

The assumption behind minimum wage laws, as I understand it, is that employers set wages strategically to maximize benefits for the employer by minimizing the cost of labor without considering the consequences this has for the worker.

Perhaps because the worker, as a free person and a competent individual, is responsible for such consequences himself?

|7.30.09 @ 1:13PM|#

Neu,

I think he meant that it seems arbitrary to the labor side. I think that capricious might have been a better word choice.

Labor often thinks that wages are capricious, i.e. that they do not consider the consequences of wages on the employer.

For this mindset, I point to the perennial feminist obsession with the gender pay gap, wherein they compare two jobs with disparate worth and argue that the difference in wages is the result of sexism.

Liberal Congressman|7.30.09 @ 1:14PM|#

Look, the poor are uneducated, powerless and just don't know any better. That's why they vote for us.

|7.30.09 @ 1:17PM|#

The really pernicious idea behind minimum wage laws is that there are no jobs worth less than $7.25 an hour. There are and the rational business owner will fill them with illegal labor.

|7.30.09 @ 1:21PM|#

as I understand it, is that employers set wages strategically to maximize benefits for the employer by minimizing the cost of labor without considering the consequences this has for the worker. The minimum wage law is an attempt to force employers to consider the consequences for the worker.

Then you understand it incorrectly. Employers are very interested in consequences for employees. Happy employees are more productive.

Minimum wage laws assume, regardless of productivity, that the prospective employer should be more concerned about the consequences for the employee than he does to his own profit, which is the purpose for both jobs in the first place.

Believe me, it is much easier to remain smaller than to be forced to put your employee's consequences before your own.

Barry Loberfeld|7.30.09 @ 1:35PM|#

How to argue against the minimum wage with liberal and conservative, secular and religious

|7.30.09 @ 1:41PM|#

"But the idea that government can increase wages by decree with only good consequences rests on a serious economic fallacy: that employers set wages arbitrarily."

Yes, undoubtedly true.

However, equally true is the fallacious belief that employers have any idea of their employees' productivity and how they should compensate them as a result. In light of this fact, many firms use the minimum wage as a guideline, and regardless of whether it was (marginally) higher or lower, would start entry-level hires at or around this rate.

Also important to keep in mind (and often lost all who discuss this and other economic issues) is the fact economic theory has caveats, the most famous of which is ceteris paribus (all else being equal), which is never the case.

Marginal changes to the minimum wage is unlikely to have much of an impact on employment or improve the lives of workers, which makes most of these arguments purely academic.

|7.30.09 @ 2:04PM|#

The argument I always here for the minimum wage is a moral case than an economic efficiency or equality case. The moral argument is that it's immoral for a person to work full time and still not be able to afford life's basic needs. Sometimes, very low pay is compared to slavery.

It's easy enough to poke holes in this moral case, but I think this sentiment underlies a lot of the pseudo-economic arguments; it must be dealt with before a person is amenable to rational arguments against the minimum wage.

It works the other way too - you won't convince, say, an Objectivist, that the minimum wage makes economic sense until you deal with whether the gov't has that kind of moral authority.

Anonymous|7.30.09 @ 2:21PM|#

Joe_D, I can accept that moral argument and still argue that it's absolutely none of the government's business. Government is not the collective's tool to impose its will; it's a self-defense arrangement, not a suicide pact.

Of course, the argument that (1) government is morally equipped by the collective to undermine property rights at its will (2) food and shelter is a government-guaranteed right and (3) GNP-destroying market distortions are better ways to manage equality (which of course implies that equal poverty is more acceptable than the horrible sin of envy when wealth differs) -- that's absurd.

|7.30.09 @ 2:26PM|#

It's easy enough to get the minimum wage to rise. Stop immigaration, and decrease the population.

That will decrease the supply of workers, and thus increase the price they are paid for their labor.

Douglas Gray|7.30.09 @ 2:34PM|#

A few years back, there was an LA TIMES article about a houseful of Hispanics who were all making near minimum wage. But they pooled a good portion of their earnings to make a $4,000 mortgage payment. So even the moral argument is difficult to pin down, as it fails to take into account the wide variety of situations people live in.

|7.30.09 @ 2:47PM|#

"If minimum-wage advocates really believe wages are set arbitrarily, why do they favor only a $7.50 or $14 minimum? Why not $100?"

To understand why Stossel is wrong about this is to understand why libertarians are wrong about all labor policy. This "why not a minimum wage of $100/hr?" reductio attempt is nonsense. It is like asking "if a 35% income tax rate is good, why not a 95% rate?" Of course there is going to be a point at which you kill the golden goose. The trick is to stay below that point.

Minimum wage is functionally a narrow tax (on certain employers) earmarked for a narrow group of recipients (low-wage employees). It has a cost, like any other tax, but a reasonable and legitimate political judgment has been made that the costs outweigh the benefits. Many more workers get the benefit of a higher minimum than suffer job losses or reduced hours. And high-school teen employment is a much lower priority than improving the bargaining position of low-earning adults and heads of household.

The minimum wage simply does not cross a critical margin that destroys more employment than the gains provided for low-earning workers. Indeed, it is far below that margin. Thus, its opponents can never quantify the alleged harms, and must, like Stossel, fall back on pure, uncorroborated doctrinal theory.

JB|7.30.09 @ 2:57PM|#

The minimum wage should be $20 trillion per hour.

Make it so!

Liberals make fun of Christians all the time for their beliefs, but liberals believe in the magic of putting words on paper. Much bigger fools in my book.

|7.30.09 @ 3:02PM|#

Leftist labor policy: Pay people more than they are worth to reward them for never acquiring any skills.

Yeah, the libertarians are craaaazy.

Sean W. Malone|7.30.09 @ 3:04PM|#

"Thus, its opponents can never quantify the alleged harms, and must, like Stossel, fall back on pure, uncorroborated doctrinal theory."

Fail.

|7.30.09 @ 3:18PM|#

"This "why not a minimum wage of $100/hr?" reductio attempt is nonsense."

The reducto ad absurdium is nonsense? That's right up there with what I read in a letter to a paper, "The problem with dichotomies is twofold".

Dan, I think your line of reasoning is reasonable enough, and it breaks the issue into an empirical and utilitarian argument. But whenever this issue is analyzed that way, it seems like the conclusion comes prior to the evidence. I don't think many people bother to fully understand that sort of argument, especially not those with a strong ideology (Libertarians or Leftists).

I don't claim a strong opinion on the economic facts of the minimum wage issue, since my opposition to it precedes a cost-benefit analysis. Like with drug legalization.

|7.30.09 @ 3:22PM|#

MNG left the thread and didn't respond to this the other day, but I'm not try to bust his balls over it. I'm just curious why the flood of leftist didn't even try to address my evidence of jobs lost to minimum wage.

SugarFree | July 23, 2009, 9:56am | #
MNG,

50-70 undergraduates won't have a job in the libraries on campus for the 2009-2010 as a direct result of the hike in minimum wage. The university wide figures are close to a thousand unemployed or underemployed student workers for the entire university.

Sure, it's just an anecdote, but I don't believe that my situation is somehow unique. And these kids would rather have a $6.55/hr job than no job at all.

Not every job is worth $7.25/hr. Mandating that they all are costs jobs. Yes, they are jobs on the margins, but a marginal job is still a prize find for somebody.

You are not economically illiterate, but for the ones who are... If the government suddenly decided that milk was worth 11% percent more and applied that as a surcharge, would any of you be stupid enough to argue that it wouldn't affect the sales of milk at all? If higher prices don't lower consumption, then what's the point of sin taxes on gasoline, cap and trade, etc.?

|7.30.09 @ 3:32PM|#

I'm on the fence about this, so I'll ask: What is the difference between a minimum wage increase - or as it has been said, a "tax" on employers then distributed to the lowest-paid workers - and the Bush stimulus of 2008? If I recall, it was roughly $300-$600 per independent, and it also had a negligible effect on aggregate demand. Was the bush stimulus just not enough? Was it that it was given to all economic brackets and not just the lowest earners (if minimum wage increases are generally followed by wage increases in all brackets, would this even matter?)? The fact that it was given directly from the federal government and not by the employer? Other reasons?

Anonymous|7.30.09 @ 3:45PM|#

What is the difference between a minimum wage increase [...] and the Bush stimulus of 2008?

One is a single-time misery, the other is an on-going misery?

The fact that it was given directly from the federal government and not by the employer?

Heh, directly. Your tax dollars at work.

Vehical Driver|7.30.09 @ 4:20PM|#

Minimum wage laws don't work. They are an intellectual fiction.

Money is simply a medium of exchange and a store of value. Instead of directly bartering goods and services, we can exchange money and greatly increase the specialization of labor in our economy.

Money is a way for an employer and employee to agree on the value of labor... the money is exchangeable for a share of the total of scarce goods and services. Minimum wage doesn't increase the value of the labor, thus it doesn't increase the share of goods and services that the employer will be paying his employees. It simply means that the market will have to reconcile the fact that instead of an hour of low wages being represented as $7.50, it will now be represented at $8.50. The goods and services that once cost $7.50, will now cost $8.50, and the real wage of the worker won't change.

That is of course in the abstract. In real life other things can happen. If the minimum wage is still below the equilibrium wage, it largely won't have any effect (raising the wage from $7.50 to $8.50 doesn't mean anything if everyone already makes $9.00). Or, if you raise minimum wage by 20%, an employer might fire 20% of his labor force, and expect the remaining 80% of the labor force to continue to produce the same amount of goods and services. In that case, wage might go up, but the workers are working extra hard to make that wage - the system is simply taking advantage of inaccuracy of measuring labor by the hour.

In most cases, raises to the minimum wage are small, below the equilibrium wage, and have very little effect on the economy. It is simply a symbolic token measure politicians do to look good, with no real effect one way or the other on the lives of the working poor... but fortunately for politicians the poor are easily swayed by such theatrics.

Space Fiend|7.30.09 @ 4:52PM|#

Vehical, you're right in an academic sense, but in the real world of the U.S., the equilibrium unskilled wage is impossible to measure and establish - even the worst, most dysfunctional worker brings skills to the table besides brute labor (ability to read being the most obvious example).

Your typical native-born American teenager will be able to do manual labor, read, write, use a computer and other electronics, etc etc. The fact that the "worst" labor has such extensive skills drives the perception that the equilibrium wage is lower then the minimum - in fact, I would argue that this is almost certainly not the case. If a neanderthal showed up and wanted to be paid, I find it hard to believe that level of labor and cognition would be worth more than $7.25/hour, even in New York or LA.

Space Fiend|7.30.09 @ 5:12PM|#

I may not have made this clear:

This of course destroys/prevents countless jobs that don't need these additional skills.

Sean W. Malone|7.30.09 @ 5:14PM|#

PS:

Minimum Wage: 50 Years of Fail

To: Dan, et al.

Enjoy.

mark|7.30.09 @ 5:19PM|#

If a neanderthal showed up and wanted to be paid, I find it hard to believe that level of labor and cognition would be worth more than $7.25/hour, even in New York or LA.

I assume you mean less than $7.25/hr, especially in New York or LA, i.e., an entry-level worker provides more than $7.25/hr of value everywhere, and a lot more than that in LA, thus justifying hiring ALL entry-level workers. But the continuing unemployment of entire swaths of the population, as well as the mass employment of illegal immigrants, who are often paid under the table for less than the minimum, seem to disprove that theory, at least to me. (On refresh it seems you addressed that. But sometimes the ability to read is not enough, or not applicable to a job. Wal-Mart greeters are worth something, but it's hard to quantify and is justified for the business, and you can bet that higher minimum wages will lead to less of these jobs.)

I wonder what the cost (in GDP, or GDP/capita, or income/capita) of the minimum wage would be if you added it up. You would have to include the following:

1) Loss of production (and consumption) by people who would otherwise be employed. This could be felt in the economy as higher sales for some people, lower prices for others, and the economic benefits of trade and division of labor.
2) Services to pay for those people to live.
3) The deadweight loss of taxing people to pay for those services.
4) The effect of having an entire unemployed underclass with no source of income except for the drug trade. This means police, property damage/insurance cost, and politicians like John Edwards.

kilroy|7.30.09 @ 6:43PM|#

"Was it that it was given to all economic brackets and not just the lowest earners"

Just FYI, some of us got nothing.

|7.30.09 @ 9:02PM|#

Minimum wage laws do nothing to help those who the law is targeted. If minimum wage is raised to $9.00 an hour..those making $10.00 and so on will need a raise as well to maintain their status in relation to the minimum wage. Ultimately the cost of goods and services will increase and those making minimum wage will be at the same standard of living as they were before.

Not to mention, the high wage burdens imposed on these employers will force them to either downsize, close down or outsource in the long run.

roy|7.31.09 @ 2:53AM|#

Minimum wage laws do nothing to help those who the law is targeted.

Not true.
They do help union workers at the expense of the young/uneducated/unskilled... that is precisely their intent. The propaganda surrounding it is what's misleading.

megapotamus|7.31.09 @ 8:55AM|#

What's with that "Ole'!" from the CSM? Are spanish speakers the only ones at minimum?

But the final philosophical point on this was broadcast years ago by The Kids in the Hall....
"Minimum wage, eh? And what does that leave for you? I guess Maximum Wage?"

|7.31.09 @ 9:20AM|#

John,

Having worked for a couple of businesses which employ large amounts of labor, I can provide a couple of examples supporting your point. These examples have the advantage of being 'seen,' which is sometimes rare in this debate.

First, in a multi-unit fast-food chain, salad prep was at one time done by workers in each and every restaurant. As wage rates increased, salad prep was centralized resulting in fewer total hours spent on the task. The incremental distribution costs were more than offset by the saved wages. At the restaurants, employees may not have lost their jobs but they received fewer hours.

Second, in an international beverage company (but it could apply to any industry), in high-wage markets, typically in the first world, the manufacturing equipment used automated many tasks (such as loading finished product on to pallets), reducing the need for high-cost labor. In low-wage markets, typically third world, less expensive manufacturing equipment was used and low-cost labor handled the tasks which are automated in the first example.

This is not an instantaneous reaction to wage increases but becomes more and more prevalent over time.

You could easily compare how many workers a multi-national uses to operate similar plants in India or Africa versus Europe or the US. The former could use 10 times as many workers as the latter, or even more.

|7.31.09 @ 9:23AM|#

Their goal is maximizing equality,

Nope, that's the pretext for power-grabbing, not their goal. Their goal is the power itself. Always has been, always will be.

-jcr

|7.31.09 @ 9:33AM|#

To understand why Stossel is wrong about this is to understand why libertarians are wrong about all labor policy.

Gads, that indoctrination sure did build up good and thick around your tiny little mind, didn't it?

Of course there is going to be a point at which you kill the golden goose.

...and the higher you set the minimum wage, the more people you forcibly prevent from working.

Whenever government interferes in the price of ANYTHING, including labor at the low end, they will either create a surplus (by forcing the price too high), or a shortage, (by forcing the price too low.)

Minimum wage laws let morons like you strut about in a fog of ignorant smugness about your fictitious moral superiority. Enjoy that smugness; better people than you are paying for it. Want to know who's exploiting the poor? Take a look in the mirror, you asshole.

-jcr

|7.31.09 @ 9:39AM|#

imposition of the "serf" system,

Isn't that what Rahm Emmanuel's "universal national service" scheme is all about? He's starting on college-age kids, but I don't believe for a second that he wants to stop with them.

Shut the fuck up, Lonewhacko.

-jcr

fuzzo|7.31.09 @ 10:34AM|#

"... even if an employer wants to pay workers who produce, say, $4 worth of value an hour only $2 an hour, he won't be able to. Someone else will hire them away for $3 or more."

what nonsense. do you really believe that walmart is concerned that their employees are stolen from them? or burger king? or jiffy lube? you're just like the media you admonish as short-sighted. you haven't got the slightest idea of what's going on in this country, mr. stossel, but you have to do your job. so you make up this crap and try to make it stick. you're just as bad as anyone working for the christian science monitor. no, wait. worse.

|7.31.09 @ 11:07AM|#

The latest increase in the minimum wage probably had little immediate effect on employment because the change in wage rate has been anticipated since it was written into law. The workers laid off or not hired has already happenned. It is only unanticipated increase in the minumum wage that cause immediate effects.

Anonymous|7.31.09 @ 11:10AM|#

do you really believe that walmart is concerned that their employees are stolen from them? or burger king? or jiffy lube?

Well, training takes time and money that's most efficient to minimize, so I'd say yes. I don't understand your point. You're saying that they're not willing to may the going rate for marginal product of labor, and therefore they don't care if someone paying higher hunts their heads... but if that's the case, no one would be working there at all.

So you're saying the employees are being coerced into working there for lower-than-market wage? I can't imagine what you think of waiters.

|7.31.09 @ 12:11PM|#

When I shop at WalMart I usually check my self out. My "minimum wage" is zero.

In the WalMart parking lot the guys (usually young, often minority) pushing the carts back to the store now have a new "helper". It's an electric pusher that fits into the end of the train of carts allowing a single employee who does the steering at the front of the cart-train to handle a job formerly handled by two employees. Minimum wage of the electric pusher is zero.

Funny how people who think the way to reduce tobacco usage is to increase the price cannot understand (or pretend to not understand) that the same logic applies to jobs.

|7.31.09 @ 1:47PM|#

You don't get it, John. If a young person finds such a high-paying job, whom will they credit? The Democrats who mandated it, of course. If a young person can't find an entry-level job, where do they turn? To the government, of course. Lesson learned? The government (i.e., Democrats) solve their problems. Either way, Democrats win. As elegant as it is cynical.

Sean W. Malone|7.31.09 @ 2:50PM|#

"Funny how people who think the way to reduce tobacco usage is to increase the price cannot understand (or pretend to not understand) that the same logic applies to jobs."

Well done sir.

Alice Bowie|7.31.09 @ 4:06PM|#

There was a FREE MARKET way before the Minimum Wage.

If you leave it up to companies, people would make a $1.00 per hour, be required to work 23 hours per day, and would be thrown to the street as soon as they called in sick.

But, to make the libertarians and conservatives and company owners happy...Let's get rid of the minimum wage.

So, next time you go to McDonald's...it won't be a High School kid at $3.35/hour serving you fries...It will be a Homeless guy with Dumpster-Rights making $0.00.

And trust me, you won't find a McDonalds, Wendys, Burger King in site that won't go along in driving down the salaries.

I love these Minimun wage cutters who make NO WHERE NEAR the Minimun Wage.

Once again, the sign-of-the-times. The GROWTH of the IN-COMPASSIONATE AMERICAN.

Alice Bowie|7.31.09 @ 4:10PM|#

Remember, as you keep sending jobs to India. As more and more people become unemployed...people will have to settle for 'dumpter-rights' and their 'McJob'.

And, of course, the libertarians will shrug their shoulders and say "SO !!!!"

But you will definitely see that the SPIRALING De-Flationary Affect will AFFECT THEM AS well via LOST PROFITS and CAPITALIZATION...One of those 'unseen consequences'

Anonymous|7.31.09 @ 5:12PM|#

Alice Bowie's conception of skilled labor is Bob Crachet.

Alice, fuck off, fascist.

Alice Bowie|7.31.09 @ 5:59PM|#

Oh I'm not a facist.
I'm just a short bald funny looking middle-aged TROLL

Alice Bowie|7.31.09 @ 6:00PM|#

Nevertheless, I support living wage...as an opinion. It should be put to vote. Not dictated by me.

So, do u still think I'm a facist? I'm a pretty liberal one...at best.

|7.31.09 @ 6:35PM|#

While I'm not anon @ 5:12, the fact that you think wages should be dictated by the government absoultely makes me think you're a facist.

Neu Mejican|7.31.09 @ 7:45PM|#

Marshall Gill,

I am sure you misunderstood me.

You took my assertion about what the logic behind minimum wage laws was as a statement about how the world worked.

For the record, I don't buy your characterization of the world for a minute.

See John's comment just below yours.

I think RC Dean's response is cute.

Alice Bowie|7.31.09 @ 8:42PM|#

We need Gov...to an extent. And I'm not a facist.

We are the GOVERNMENT. I suggest that we vote on it...and that is NOT being a facist.

Alice Bowie|7.31.09 @ 8:42PM|#

If we vote...and the majority says no...I'll live w/it.

Anonymous|7.31.09 @ 9:30PM|#

I suggest that we vote on it...and that is NOT being a facist.

Democracy doesn't preclude compulsory collectivist decisions. In fact, it facilitates them in legitimizing them as the wishes of "society", even when it's not unanimous. There was once a thing known as a democratic republic, which employed diffuse and varied powers granted to government in order to balance tribalism with parocheal desires. Of course, that worked better when free (as in speech) land was plentiful, men were men, and politicians were tarred and feathered.

Today, instead, US Constitutional amendments are inconsistently and contrari-wise to English meaning interpreted to apply or not apply to any governmental body the courts decide. That's simply oligarchy ruling by whim, with iron claws -- with toes of clay, so as to feel the pollng waters. The little socialists, that is to say most people who involve themselves in politics, debate nothing so much as the difference between "bread" or "circuses"; either way, we're going to pay, because their philosophy demands a totalitarian government, and both reinforce society's submission.

I'm sorry for "fuck you", and I'm open to argument about whether "fascist" was accurate (although I realize that's a cop out because it's not more germane to this thread than some others). But I'd rather live without government, and with voluntary associations of my choice (what used to be called "family", even for non-blood kin). Further, if (when (since)) society votes itself into a totalitarian police state bent on redeeming and reshaping the individual in the eyes of the collective, I will not obey (objection), I will not serve (withdrawal), I will not pay (give unto Ceasar), and I will try my damnedest not to live with it in any other way (you can burn the land and boil the sea, but).


We are the GOVERNMENT.

Yes and no. Mostly no, but not completely. Being a sovereign individual means doing what one thinks is right, despite the consequences. But that isn't a prevalent sentiment. Collective moralities clash with it, but have no legitimacy over me because I do not grant it.

Sometimes I think libertarians are too philisophical and not politically-active enough, but times like these I think it's the other way around.

|7.31.09 @ 11:38PM|#

I believe that many of you need to locate someone who has a small business and ask them to go over their current P&L statement with you. You will find them paying business, personal property, real estate, and local mandatory taxes and fees. They are accountable to collect and account for local and state sales taxes. (How much more can we really expect to suck out of these people?). They pay one half of SS and medicare taxes on employees wages. They pay their good employees as well as they can in order to keep them. Artificial wage inflation on the low end hurts their ability to raise the pay of employees that have had time to grow in their jobs. Entry level employees are simply not worth as much as seasoned employees. Since price increases alienate customers and chase away business,the tension will shift to whether to try to do more business without adding employees or letting go one higher paid and hiring two entry level employees if you need to expand. Small businesses employ the majority of people in this country. The unintended consequences of mandatory min wage hikes will likely take time to show up in statistical analysis but make no mistake that this will hurt the very people who are at the bottom and need a chance to prove themselves.

|8.1.09 @ 9:41AM|#

The biggest beneficiaries of the increase in the mim wage rate are

not the min wage workers, but rater the union members who contracts

are tied in part to the mim wage rate.



These members are among the highest paid "working class" laborers.

They will automatically receive the same "pay" raise as the mim wage

worker. This is why many unions push so hard for increases in the

mim wage. It is a backdoor raise that all of us pay.



Good article, but I would like to see a breakdown of the cost to

the individual states in terms of increase budgets to pay for these

wages.

Jesus|8.1.09 @ 11:12AM|#

So, wouldn't it be the best economy of all if all labor was paid Zero?

Stossel should get a job in a cherry orchard. He's good at picking them. There are a multitude of national living wage ordinances across the country and a multitude of impact studies. The vast majority register some job shifting in the short term and long term economic improvement in local economies. People earning less than around 80 grand a year typically spend all or most of their incomes.

30 years ago wages in this country were the pride of the world. Now, we're expected to be ashamed of ourselves for wanting to create a decent life for our families and for having pride in our skills and recognizing our worth in our own economy. Capital brings nothing to the table today. It's become a risk free enterprise. Labor risks everything. Their lives, their families, their communities, their homes, their futures.

The worker gets blamed for building a shitty car that management designs to maximize shareholder profits. Then the corporate media tells us how lazy and overpaid the American worker is. Then the "multi-national" corporation takes manufacturing overseas -- where they can utilize what amounts to slave labor. Ask workers conscripted to be slaves for Halliburton or KBR in Iraq how proud they are that they're lack of getting paid contributes to the Arab Corporation of Halliburton's shareholder revenue.

We cannot compete with slaves unless we're willing to become one.

Maybe Reason can outsource Stossel's article space to India or China and save themselves from overpaying for weak journalism.

Anonymous|8.1.09 @ 11:44AM|#

where they can utilize what amounts to slave labor

Ah, socialism: where getting paid more than average in India is slavery.

|8.1.09 @ 9:35PM|#

While putting myself through school I worked at Pizza Hut. Eventually I was responsible for closing the store, counting the money, and calculating what we made that day.

Labor was the expense we counted.

You can't operate a Pizza Hut with fewer than three people at a time, even if no one comes in for a few hours. (Of course more people are scheduled to work busier times). Each of those three needs to at least make minimum wage.

Suppose you double minimum wage? To make the same percentage, the price of pizzas has to double. If prices double, what was the point of minimum wage?

If you don't want the price of pizza to double, you have to spread your labor budget around fewer hours. This means that each worker has to work harder to be as productive as they were before. You also have to spend a higher percentage on entry level people, and consequently you less to spend on raises.

What typically happens is that the manager, who is on salary (and not a princely one) is expected to work a lot more hours. To stay competitive, you might have to have more salaried positions, and make them work more hours too. Management is of course exempt from overtime and whatnot.

So, you'll have a bunch of entry-level people, and the only reward you'll be able to offer them for good work is a salaried "management" position where they can be made to work overtime for no more pay.

Some worker's paradise.

Alice Bowie|8.2.09 @ 9:48AM|#

Jesus, That's the BEST ARTICLE I've seen here.

For Real !!!

I'm cutting it out and showing it to my friends.

Couldn't be better said.

And, I'm an Agnostic.