The Minimum Wage Mirage

It would be nice if every worker were worth $9.80 an hour. But not all workers are.

Unemployment remains high; job growth is sluggish; and millions of Americans have given up hope of ever finding work. So how do creative legislators propose to generate new hiring? Easy: Make it more expensive.

That's right. In Congress and several states, some lawmakers want to increase the legally mandated minimum wage. They think employers should have to pay more for labor. They say it should be illegal to hire people who are willing to work cheap.

This amounts to a stubborn defiance of simple reality. A recession puts strong downward pressure on wages and salaries. A slow recovery has the same effect, only milder. It's an unfortunate consequence of a weak economy.

You can't blame anyone for wanting incomes to grow. But trying to achieve that in this manner is like trying to start a campfire by aiming a hose at a swimming pool.

Still, the idea has no shortage of fans. Some supporters think it should be increased to $9.80 an hour by 2014. Sen. Tom Harkin, D-Iowa, chairman of the labor committee, told The New York Times a raise would "help hard-working families make ends meet, join the middle class, and help move the economy forward."

New York Mayor Michael Bloomberg favors increasing his state's floor. Even Mitt Romney thinks the federal minimum wage should climb automatically with inflation.

No one will deny that the minimum wage provides for a meager income. Under the federal requirement of $7.25 an hour, a full-time worker earns just $15,080 a year. Illinois' $8.25 minimum wage yields an annual income of $17,160. The federal poverty level for a two-person family—say, a single mother and a child—is $15,130.

It would be nice if every worker were worth $9.80 an hour. But not all workers are. If you tell a company it has to pay $9.80 to someone who produces only $7.50 in value, the company may choose to pay that employee an even lower wage: zero.

That's one way a higher minimum destroys jobs. Another problem is that by increasing labor costs, the change would inevitably tip some companies from profitable to unprofitable. A fast-food restaurant that can stay afloat paying $7.25 an hour might sink under the weight of a 35 percent increase. Some businesses would disappear, taking their jobs with them.

It's a time-tested axiom of economics that when the government sets a minimum wage, it causes unemployment by pricing some workers—particularly marginal ones—out of the labor market.

David Neumark, an economist at the University of California, Irvine and co-author of the 2008 book "Minimum Wages," says a 10 percent boost in the minimum wage could be expected to reduce employment among low-skilled workers by 1 to 2 percent.

Supporters of the change insist that an increase would have no such effect, and a couple of studies support the claim. But if it's true, why stop at $9.80 an hour? Why not $19.80? Why not $99.80? Water won't run up a steep slope—but it also won't run up a gentle one.

Nor is it plausible to believe, as the National Employment Law Project does, that giving more money to workers would lift the economy because it "would give people more money to spend." It would do that by leaving other people less money to spend—either the business owners who would have to pay higher wages or the customers who would face higher prices. The total amount of money available for making purchases wouldn't change.

Supporters think raising the minimum wage is a good way to reduce poverty, but it's not. Neumark says only about 17 percent of minimum wage workers are in poor families. Many of the rest of are middle-class youngsters.

A better way to help workers at the bottom is already in place—the federal earned income tax credit, which supplements the earnings of low-income workers. A woman with one child earning the minimum wage in a full-time job can get an additional $3,169 per year from the tax credit. This approach has the distinct advantage of channeling extra money to the working poor—without turning some of them into the unemployed poor.

In trying to help those in need, avoiding certain harm to the intended beneficiaries is not too much to ask. In fact, it should be the minimum.

Steve Chapman blogs daily at newsblogs.chicagotribune.com/steve_chapman.

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  • R||

    First!

  • Pham Nuwen||

    What's it like to be so LAME?

  • R||

    You could always ask YOUR MOM. (Didn't we already do this once? Wait, that's what she said...)

  • Jake W||

    You "that's what she said"-ed your own statement. Double lame.

  • WTF||

    Clearly Chapman hates poor people and wants them to starve, that's why he doesn't want them to earn a living wage. /leftard

  • Suki||

    True. He didn't even mention fringe benefits or golden parachutes for the wage slaves beneath the golden arches. /sarcasm

  • Suki||

    If raising the minimum wage is such a great idea to some, why do't they advocate to raise it to something really good, like $25/hour?

  • WTF||

    Hell, why not $50/hour, that everyone can earn six figures! No more poverty! YAY!

  • Pound. Head. On. Desk.||

    Let's just really level the playing field and give every American citizen a million dollars. We'll all be rich! Everyone can buy whatever they want.

  • Suki||

    Small potatoes. How about a million dollars per hour!

  • Pound. Head. On. Desk.||

    And everybody gets a beachfront home. And 'round the clock BJs!

  • ||

    as long as we are allowed some recovery time between BJs, without losing access to BJs.

    A minimum recovery time law maybe...

  • ||

    BJs provided by govt. employees or govt.-contracted independent vendors? I'm afraid quality assurance would be similar to other govt. provided services...

  • ||

    When I contemplate the idea of govt. mandated BJs provided by govt. employes, or contractors, I cannot avoid thinking of ...teeth... A govt. BJobber's teeth would be like a cop's tazer, flashlight or gun. To be used at the BJer's discretion to serve & protect said govt. employee's well-being and his/her job and pension. I propose instead, a BJ voucher to be used in the BJ marketplace.
    (*see comment re Procedures at Brickbats post above)

  • WTF||

    You could probably win an election with that, you know.

  • Suki||

    You know who else that worked for . . .

  • ||

    Everyone can buy whatever they want.

    Like fast food, guns, porn, gas-guzzlers, fake tits, and remaindered copies of Declaration of Independents. Far better we get paid in kind in necessary goods (to be determined by Top Men)

  • Pro Libertate||

    The problem with libertarians is that most of us think too small. Think big. Really big.

  • ||

    Exactly. Why have a minimum wage when you can simply outlaw scarcity?

  • Brutus||

    I demand a law that makes me thin, rich and good-looking.

  • TELLMOFF||

    $50/hr is too much. $7/hr is too little. Good judgment would put the minimum wage at around $15/hr to $20/hr. It is impossible to live on anything less unless parents or government welfare is helping out.

    Good judgment is something that you libertarian kids don't have.

  • k2000k||

    Good judgement would realize that whenever you increase the minimum wage you correspondinly increase prices. Just look at San Francisco were they no longre offer their $ 5 deal because it is no longer cost effective.

    http://blogs.sfweekly.com/thes.....ancisc.php

    Whats worse is that if you didn't have all that needless regulation increasing the cost of business it makes the minimum wage even less livable.

  • TELLMOFF||

    I want to pay higher prices so that people can work for a living wage. I would be ashamed of myself if I had any other viewpoint.

  • ||

    That is very nice and generous of you. Many, many other people also feel that way. However, by raising the minimum wage you are FORCING everybody to act according to your "viewpoint". And, given the number of Americans shopping at Walmart and Amazon, low prices are very important to many people. Especially poor ones.

    Why do you hate poor people?

  • TELLMOFF||

    I don't hate poor people. I hate libertarian people because they are not as generous as I am.

  • Empress McNastyPant||

    You do realize that EVERYONE, even low wage earners, will have to pay those higher prices, right?

    You should try to think out your ideas before you state them.

  • TELLMOFF||

    When low wage earners get more money, they will be able be able to afford higher prices. What I forgot to "think out" was the libertarian dogma that blocks out what everybody else can understand.

  • ||

    Ummm, no. Price increases tend to match or, more frequently, outstrip the increase in wages due to the increased cost of labor and other labor costs, like higher payroll taxes (the employer's share of 7.50 an hour is less than the employer's share of 20 per hour - protip for ya there). What you forgot to think out was much of anything other than "more money = good", because you have no concept of the definition of inflation.

  • Red Rocks Rockin||

    Good judgment is something that you libertarian kids don't have.

    And good math skills are something that you progressives just don't have.

  • ||

    Uh, I lived on $9.35 for almost three years, with raises that were basically inconsequential.

    I still managed to save up four grand for college in that time by not living like a fucking idiot.

  • TELLMOFF||

    You either lived with your parents or in someone's basement for $50/week. You sound like you were worth much more than $9.35.

  • ||

    Classy rebuttal. Is it an ad hominem when the interlocutor is the subject of conversation, even if you have no evidence?

  • TELLMOFF||

    Kibby has good traits. I am sharing what I have personally seen my whole life.

  • ||

    Studio apartment, which was $500 a month before my car/health insurance & internet. I just didn't waste money on crap like cable TV & eating out all the time. But thanks for the condescension!

  • TELLMOFF||

    Kirby, you have greater foresight and work ethic than most.

  • 0x90||

    Needs (much) more subtlety.

  • plu1959||

    But ... but ... Card Krueger!!!1!

  • ||

    At $57.50, certainly not a minimum-wage tome.

  • sarcasmic||

    How dare you suggest that raising minimum wage increases unemployment among the poor?!?
    That's not the intention!
    The intention is to help the poor!
    Why do you insult the intentions of those who want to raise minimum wage?

  • TELLMOFF||

    If the minimum wage was raised to a reasonable level like $15/hr people would would still be hired to pick crops, make beds, and wash dishes. They would not be Mexicans.

  • sarcasmic||

    If businesses were forced to pay people $15/hr for those kinds of jobs, then the price of those goods and services would rise accordingly.

    Make McDonalds pay it's people $15/hr, and you'll see the price of a Big Mac Combo Deal double in the blink of a eye.

    Union wages that are tied to minimum wage would jump as well, causing the prices to jump accordingly.

    Now everyone's got more money, but everything is more expensive.

    It would be a wash.

  • TELLMOFF||

    Just because a dish washer is paid $15/hr doesn't mean that the pay of a union teacher will double. You provide no support for your conclusion, libertarian.

  • sarcasmic||

    It's called deductive reasoning.

    I wouldn't expect you to know anything about it.

  • TELLMOFF||

    Deductive reasoning can only have one valid conclusion. Your example is not deductive reasoning.

  • Empress McNastyPant||

    Re-read sarcasmic's post...

    Ok, now that you have done that, think....

    At this point, you went "Ah-ha!" If not, you're a total troll.

    "Union wages that are tied to minimum wage would jump as well, causing the prices to jump accordingly."

  • ||

    So what you're saying is that if I pay, say, 35% of my wages for housing when I make 10 dollars per hour, and then if I pay 35% of my wages for housing when I make 40 dollars per hour, I'm actually paying the same amount for housing? Mind = blown.

  • ||

    So what you're saying is that if I pay, say, 35% of my wages for housing when I make 10 dollars per hour, and then if I pay 35% of my wages for housing when I make 40 dollars per hour, I'm actually paying the same amount for housing? Mind = blown. I just had a radical thought: that sounds almost exactly like inflation? Whoa!

  • Red Rocks Rockin||

    What a load of crap.

    I make $63K a year. Back when I was born, that would have been about $15K.

    And you're trying to tell me that my buying power is exponentially greater now than it would have been back then? You must be a college student, because only someone like that would express something that ignorant.

  • Jerryskids||

    When I started out, the minimum wage was IIRC about 2.60 an hour and our most basic economic good was about $30 an ounce, meaning two days work bought you an ounce and a case of Little Kings.

    Today, what will two days work get you? A quarter ounce and a 12 pack of Keystone?

  • hotsy totsy||

    "They would not be Mexicans"

    How do YOU know?

  • ||

    Yes yes, we have this argument every few years, and guess what? We always lose. I've not seen precisely what the dismissal of the argument to just raise the minimum wage to extreme heights is, but I'm sure it involves something about being practical and realistic.

  • db||

    *sobs quietly to self*

  • Auric Demonocles||

    The goal is to raise it to extreme heights. They're just taking their time to do it.

  • Fluffy||

    We don't actually always lose, Joe.

    Most of the time we win and the minimum wage doesn't get raised.

    We haven't quite managed abolition yet, but it's coming. Very few bad ideas in government ever get outright abolished, so it's a hard thing to get done. But if we can just keep them from raising it again, their destruction of the dollar will accomplish a de facto abolition just by making the nominal minimum wage so low in real terms that it's like not having a minimum at all.

  • ||

  • Suki||

    We lose as long as it exists.

  • ||

    All I know is, when I got my first job twenty years ago, minimum wage was $4.25. It's approximately double that now.

  • Heroic Mulatto||

    So that means you can buy double stuff now, right?!?!?!?

  • ||

    Here's an interesting chart.

    Can't remember who said it, but something along the lines of an hour of minimum wage will buy you a meal at a fast food place, no matter how much you "increase" it.

  • kinnath||

    My first job was at McD's way back in during the Nixon administration. Every couple of years I calculate how many minutes you have to work at McD's to buy lunch at McD's. It has stayed pretty constant at about 40 to 50 minutes for the last 40 years.

  • k2000k||

    Makes sense considering that fastfood is about the cheapest form of food avaliable that doesn't come from a bag or ration tin. Whodathunk that the cost of fast food would correlate to the minimum wage price? I always assumed this, even as a little boy.

  • sarcasmic||

    Fast food is cheap?
    For the cost of a "value" meal you can get a loaf of bread and enough deli meat to make a week's worth of sandwiches.

  • ||

    So what you're saying is, fast food is a regressive tax.

  • ||

    Thank you, sarcasmic. As a genuinely poor person, I am constantly frustrated by talk of fast food being "cheap." No, rice is cheap. Luncheon loaf is cheap. Pasta is cheap.

    Fast food is not cheap.

  • Jerryskids||

    I realize that one should never attribute to malice that which is adequately explained by stupidity, but when it comes to Tom Harkin I do not think that applies to this. (Although he is the same weinersniffer that introduced the legislation calling for a dollar coin because it's such a great thing and supports the E-15 mandate because it's a great thing for Iowa, so maybe he is retarded.)

    I don't need to analyze a study to intuitively know that raising the price of a product decreases the demand for a product. And who benefits from high floors on labor prices? Labor unions. As chair of the Labor committee, Harkin is supposed to be looking out for the American worker - he is instead a tool of Organized Labor, the Labor that can contribute money to Tom Harkin. Instead of lowering the minimum wage or even instituting some sort of training wage for new hires, the evil bastard is quite willing to see fewer people with jobs if it means a few more bucks in his pocket.

  • KDN||

    As chair of the Labor committee, Harkin is supposed to be looking out for the American worker - he is instead a tool of Organized Labor

    To people like Harkin, these two things are one and the same. It is impossible to be for one without being for the other.

  • kinnath||

    Harkin is both stupid and evil. Fortunately, the stupid helps to reduce the total evil that he accomplishes in this world.

  • Heroic Mulatto||

    I'll just place this here:
    Edgar the Exploiter

  • Lord Humungus||

    As a young man, working shit jobs was just part of growing up - and learning that such 'careers' do not lead to prosperity. It also teaches you the pettiness of bad managers and how to work with people you would actively despise outside the walls of the job. It certainly kept me interested in going to college.

  • db||

    Yeah, same here. Kids who never work a shit job are missing out on some life lessons, like why it's a bad idea to drink your way through your Thursday paycheck by 0730 on Friday, or how to be a good boss someday by directly observing bad bosses.

    Kids who do volunteer work or internships or whatever never really learn the plight of the unskilled laborer without working a shit job. And much of the plight is frequently self inflicted through bad decisions.

  • Drax the Destroyer||

    I think one of the most important lessons I learned from shit jobs is that I didn't want to be stocking shelves at Wal-mart for the rest of my life. From there, one can gestate a modicum of ambition to do something less shitty with their lives. Other people...seemingly revel in the below mediocrity level of employment especially if it comes with government goodies and excuses not to give more of a shit about life.

  • KDN||

    I think one of the most important lessons I learned from shit jobs is that I didn't want to be stocking shelves at Wal-mart for the rest of my life.

    One of the unintended consequences of giving people a "living wage" for shit jobs is it fails to incentivize finding something better. Yeah, stocking the shelves at a supermarket is beneath what a lot of people are capable of, but if you're making $15/hr plus medical then why would you bother trying to find something better? The living wage argument is another case of wanting a reward for being lazy.

  • k2000k||

    Very true. I was fortunate enough as a teenager to avoid the *traditional* shitty jobs. I realzied that if I was going to be payed minimum wage I might as well become a lifeguard and be able to ogle the babes and be payed for it. I also got my first taste of useless goverment regs. Life guards are supposed to be trained how to save someones life, well, I can tell you that maybe a 1/4 of the individuals sitting on the chair could actually rescue you while drowning. The other 3/4 or probably worse at swimming that you are. Not me though, I was that *asshole* lifeguard. And as for internships, I agree with db, though it did give me an everlasting loathing for brokers of almost all shapes and forms.

  • R C Dean||

    My father arranged my summer jobs in high school specifically to motivate my lazy ass to do well in school. Worked, too. They included 70 hour weeks as a farmhand, 50 hour weeks working maintenance at a processing plant, survey monkey on a heavy construction project, etc.

  • TELLMOFF||

    RC Dean, Maybe you can study hard in college and have a 70 hour week as a lawyer or corporate executive. I had jobs, my own businesses, and finally found my nitch as a criminal. It sure is nice to drink a cup of tea from my balcony in the mourning and watch the little people go to work.

  • KDN||

    Indeed. Minimum wage jobs bring a great deal of intangible benefits to laborers that have no other way to get them.

    People get hung up on raising the minimum wage thinking that these workers are going to stay in these roles forever, which just isn't the case. The result of pricing younger, less educated, and less skilled workers out the entry level labor market is to increase unemployment in the short term and retard the career growth of the least privileged. It's a policy with some of the most racist effects possible, yet its primary support comes from the party that counts on 90% black support every election. Such irony.

    I worked sub-minimum wage jobs from ages 12 - 15 (which makes me double oppressed), made minimum wage at 16, and double it from 17 - 20. The experiences of each made me a better worker as I moved further into the real labor market; I'm glad my old man convinced one of his contractors to break the law and take me on so I could get started earlier.

  • Rich||

    Why not $99.80?

    Indeed a true living wage, a wage which will live in infamy.

  • Bee Tagger||

    Shouldn't a wage that will live in infamy be $12.07?
    While bumping the work week up to 41 hours.

  • Soc Indv Sparky||

    I think, for the sake of making a statement, the minimum wage should be raised to $19.84. Someone might get it.

  • db||

    Party like it's $19.99

  • ||

    Jew-fro and unibrow. Deadly to the ladeez!

  • Alice Bowie||

    Minimum wage should be $25/hr on a six hour workday along with a max four day workweek. You work from 9-5 mon-thurs. But you get one hour lunch and two 30 minute breaks.

    Tweleve paid holiday's per year would be nice. Plus we should throw in the usual man-cation holidays like:

    - the Friday after Thanksgiving
    - Monday after Super Bowl
    - Day after St. Patty's

    Why not...It's America.

  • ||

    The public sector will test your idea and get back to you.

  • Barack||

    I live in Illinois and the nobody will hire the teens here. Not too many small business owners are willing to pay a kid with no experience 8.25 an hour. Most of these kids would gladly work for less, but once again our government Knows What is Best and so we should all be Grateful.

  • Alice Bowie||

    The minimum wage is not as bad as the libertarians put it.

    One can't look at the unemployment numbers. They should show a matrix of those employed by salary range as well.

  • Sharon Stone||

    Or one could simply look at the price increases of goods and services after a minimum wage increase and realize it's counterproductivity almost immediately.

  • some guy666||

    The more i read reason magazine the more i find libertarians annoying. They just seem to be "intellectual" elitist number crunchers who over reach and rationalize everything to the point of simplication, while not dealing with human nature and human volatility. Im sure the writer of this article makes pretty good money and doesnt have to worry about shitty pay.

  • Red Rocks Rockin||

    They just seem to be "intellectual" elitist number crunchers who over reach and rationalize everything to the point of simplication, while not dealing with human nature and human volatility.

    MATH IS CLASSIST! :librage:

  • k2000k||

    It has nothing to do with number crunching and everything to do with real world observations.

    Name me one real, hard, empirical fact on how the minimum wage has helped other than by giving you the warm and fuzzies?

    Here are my negatives:

    It puts a disproportionate burden on small businesses and franchises making them employee fewer individuals and possibly stunting the growth of those businesses

    It hurts the youth, making it harder for them to be gainfully employeed in starter jobs that teach them skills that will help them find better jobs. It hurts minority teens even worse.

    http://www.freerepublic.com/fo.....9145/posts

    It raises the cost of goods, such as fast food, that people depends on so it disproportionately effects the poor. It doesn't matter to me if they have the raise the price of beef $ 1 because of minimum wage laws, I can afford it; but there are individuals that cannot.

    It is based on the fallacy that businesses are out to fuck people over at every turn, and that without the minimum wage laws we would all be virtual serfs working for a pittance. However, it ignores the fact that labor is mobile and will move to where it is given the best deal. If businesses really wanted to fuck people over then everyone would simply be paid the minimum wage because thats the law. However, the majority of jobs that exist are paid in excess of the minimum wage, because that is what the market dictates what the value for that job is.

  • some guy666||

    You people sound like you are part of the ayn rand collective bubble wacking each other off, while outside, in the real world, people are dealing with problems that your proposed economic models attempts to address. Enjoy the circle jerking.

  • ||

    You sound like you are part of the Michael Moore collective bubble wacking each other off, while outside, in the real world, inescapable data and facts are contradicting your proposed economic models. Enjoy the circle jerking.

  • Ann Cap||

    Additionally skilled laborers get paid less than they're worth because they have to subsidize the unskilled laborers.

  • ||

    lol.. lobbing softballs

  • KDN||

    while not dealing with human nature and human volatility

    Phwhat? This isn't just an exercise in Micro 101; the screwjob of the minimum wage has real effects that have been documented thousands of times, including in this thread. But hey, let's persist with a policy that is both racist and economically inefficient; the intentions are good, after all.

  • Enjoy Every Sandwich||

    I don't have a college degree and I started out with a job at shitty pay. I'm not rich now but I'm middle class. I got there not via the minimum wage but by making myself more valuable to my employers. It's not always easy, but it's pretty simple.

  • Hugh Akston||

    Great picture of Warty, though.

  • American Patriot||

    Ask the American Samoans about the miracle of minimum wage -- especially those who USED to work for the Tuna canneries!

    America is no longer what it used to be as a result of the many years of tinkering on the slippery slope of socialism.

  • some guy666||

    Nothing worse than a person pining for the "golden age"...Im sure you are not even over 30.

  • AKrumbach||

    When I argue minimum wage laws with non-libertarians, I tend to like to suggest we "should implement a maximum wage law instead": a cap on salaries and benefits equal to 50 times the worst-paid employee's wages and benefits [calculated as if working 40 hours per week for 52 weeks].

    While I mean it as both (1) a "compromise" solution and (2) satire, it's also something of an intelligence test: anybody wise enough to notice the problems posed with a maximum wage, are generally capable of understanding the economic hardships created by a minimum wage.

  • Alice Bowie||


    Some businesses would disappear, taking their jobs with them.

    And they would be replace be other businesses willing to do the same cheaper and for lesser profit.

  • Sevo||

    Alice Bowie|4.12.12 @ 10:57AM|#
    "And they would be replace be other businesses willing to do the same cheaper and for lesser profit."

    Logic fail.
    If a profit were available that an owner considered worth the risk, the first business would still be there.
    If you'd like to prove me wrong, well, just go ahead and risk your capital to start a business for, maybe, a .5% return.

  • Alice Bowie||

    Walmart does it. Home Depot does it. Target Does it.

    All these companies run at profit margins far far less than you or I would be able to had we ran these types of stores.

  • Sevo||

    Alice Bowie|4.12.12 @ 11:16AM|#
    "All these companies run at profit margins far far less than you or I would be able to had we ran these types of stores"

    Stupid fail:
    "Profit Margin (ttm): 3.51%"
    http://finance.yahoo.com/q/ks?s=WMT
    Surprise, bozo; you and I are the owners of Walmart, and you should learn the difference between sale and profit margins.
    Or, you could just put a sock in it.

  • Edwin||

    no, what the guy is saying is right. Just because one company/person/group of people are willing to do it at one margin, doesn't mean that they'd be willing to do it for less. People are different. My Dad and Uncle have been building houses for pretty high margins and do pretty well for themselves, but there are planty of builders in other more populated areas of jersey who do spot building or much smaller subdivisions with smaller houses who make like $40k-$50k a year, which my Dad/Uncle would never do.

    At the end of the day we're just talking about people. Don't get mired in economics with people as numbers or units. Different people are different. We're ultimately talking about real life, remember.

  • Sevo||

    "We're ultimately talking about real life, remember."

    Yeah, bozo, and in "real life" people don't risk their capital for nothing.
    Prove me wrong. Do it. Or put a sock in it.

  • ||

    Theoretically, yes, someone might swoop in and operate a business at 1 penny above the exact break-even point, regardless of what their labor costs are. Not a lot of people will risk more than 1 penny of capital to receive their 1 penny return, however. The fundamental accounting equation assets = liabilities + equity doesn't change - only the variables do. When labor costs reach a point where your price point has to climb beyond the value you are capable of providing, or alternatively, if you have to operate at a margin too small to create enough value for your stakeholders, you will go out of business. Every person/group of persons (shareholders) has a different tolerance for risk and return on capital, but none are economically suicidal.

  • Sevo||

    Oh, and SF is a living case study.
    The current 'living wage' (not including mandated benies) is $10.24/hr. Amazingly, kids can't seem to find jobs, so the government is starting a 'jobs program' for them:
    "S.F. summer program aims to tackle youth joblessness"
    http://www.sfgate.com/cgi-bin/.....1O1TD0.DTL
    Yes, SF decides that hitting itself on the knee is a fix for the pain of hitting itself on the head.

  • Sharon Stone||

    Yup. Sounds like a typical California governemnt scenario.

    Create a new government program to tackle a problem created by government programs.

  • ||

    The bureaucracy is expanding to meet the needs of an expanding bureaucracy.

  • ||

    "No one will deny that the minimum wage provides for a meager income."

    Actually, I will: I live on far less, and quite comfortably so, to my mind. I guess it pays to be a deluded plebeian, never knowing how poor you are.

  • Edwin||

    I once explained the simple economic argument against the minimum wage to someone, and he said, "Yeah so what?" As in, maybe it isn't worse if a few more people are unemployed. We might rather prefer that that be the case, and they can use public assistance for a while, and get better used later when they get some more education/credentials or find a job they're better at, or a boss they do better with etc. Also, perhaps better that they don't get stuck in a low-paying job and become tied to it because they make so little they end up being unable to afford to quit - you could really get stuck in a job if the pay is low.
    These are of course a few ways to look at it.

    There are also a few problems with the economics. For example, the whole idea of the supply curve is based on the idea that each additional worker is marginally less productive. It isn't hard to imagine that thjis isn't always so. The wikipedia article also points out numerous ways the simple textbook model could be wrong. not to mention a few studies that came up with different results

    either way I think the whole thing is moot. Who the hell gets anything less that $8/hr? I've never heard of it. The laborers I hire, just the guys I pick up at the train station or store, start at $10/hr. I think teens working as cashiers in some places earn less, right? I've honestly never done that work, and I don't think I know many people who have.

  • Sevo||

    You're both an ignoramus and a liar.

  • ||

    Wow. Would you care to point to any of these reputed studies that deny the existence of marginal utility? Even ardently socialist economists gave up the labor theory of value about a century ago.

  • Coach Panto||

    Well done, Statists!

    Now the next thing is to fix the price of gas lower, so that most of the gas stations close.
    It's better to have no business than to have unfair business, I always say! In fact, because I get paid more than average, I'm going to use the extra money to kindle a fire under an effigy of Adam Smith, who with his horrible promotion of division of labor, caused all this unseemly wealth to be created in the first place.

    Our descendants will look back on this time as the Unfair Ages, and they will be basking in their disease-ridden, freezing hovels, rejoicing in the misery that all must rightfully share in blissful equality.

    Thanks Statists for saving humanity from itself, and helping us get killed by nature, as it should be!

  • Jerryskids||

    Rather than raise just the minimum wage, why not raise everybody's wages? Easy to do, just have the Bureau of Engraving and Minting add a zero to the end of every denomination. Whee! We are all instantly 10x richer!

    Of course, since productivity is not increasing at all, you have 10x the money chasing the same exact goods, so all prices will immediately go up 10x as well. I believe the Spanish learned this a few hundred years ago when they came to the New World and swiped all the gold and silver.

    Raising the minimum wage without any corresponding increase in productivity has the same effect as a government jobs program whereby half the unemployed are hired to dig holes and the other half are hired to fill them in. You have no increase in productivity, no increase in economic output.

    Money is just a measure of economic value - simply decreeing that some people shall get more money does not make them more economically valuable. Given that the cost of employees is far more than just the wage they are paid means raising the minimum wage makes those people less economically valuable.

    This is Economics 101, but there are still economic ignoramuses (ignorami?) that seriously think we can mandate the economic equivalent of a perpetual motion machine. How do you seriously argue with someone who wants to explain to you how his perpetual motion machine works?

  • ||

  • M291||

    "It would be nice if every worker were worth $9.80 an hour. But not all workers are."

    This is not an accurate statement. The workers value is not fixed, such that a worker can perform one task and produce $100 of output, or another task and produce $5 of output. It's not the worker you are associating with value, rather it's the work performed (a doctor doing surgery is worth say $10,000 per hour of value, while that same doctor raking leaves is worth $5 per hour.)

    The intrinsic value of a person can't be valued, although courts have developed metrics to attempt just that, generally correlated to their potential earnings.

  • Tom Beebe||

    How about scaling the minimum wage from 50% of the adult rate, for age 15 or under, up 10% a year to 100% at age 20, and again up 10% a year at age 65 to 150% at age 70 or greater? Then, make the minimum wae the personal exemption, so any increases deprive government of revenue. Let's see that one through congress. HA!

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