Min Wage Bill Passes Senate

So the Senate has passed a bill raising the minimum wage to $7.25, the first hike in a decade. That version has a bunch of tax breaks for businesses that aren't in the House version, so it's unclear what will happen (especially if the Dems actually stick to their pay-as-you-go budgeting rules). Or when.

Details on the Senate bill here.

Summary of Gary Becker and Richard Posner's recent WSJ op-ed against the min wage, "How To Make the Poor Poorer," here.

Reason on min wage here.

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  • Dan T.||

    Uh-oh...look for hordes of unemployed workers to begin roaming the streets as soon as this takes effect. Remember, up is down and it hurts workers to pay them more.

  • ||

    What's the point of even having a government if they can't manage the economy by imposing price controls?

  • I. Self. Divine.||

    Dammit, Dan T, you've been so quiet lately that I thought we were finally rid of you.

  • Dan T.||

    But you still don't know if it's the real me or one of the Free Minds trying to purge H&R of dissenting opinion.

  • ||

    Dan, Dan, Dan. It is good to have you back. I missed you. Your 'haywoods proxy' character was a tad bitter for my taste.

  • ||

    Dan T.

    We don't mind dissenting opinion - just stupid opinion.

  • Sam Franklin||

    yeah, what was the Haywood Proxy thing about? Worth GOOGLING?

  • ||

    Yes, Dan, the fact that the central planners in this instance have not been so stupid as to maximize the damage they are capable of is proof that, really, 535 guys in Washington D.C. really are capable of setting optimal price floors for services in a hugely complex economy of 300 million people.

  • ||

    Well, Becker believes this increase is significant enough to have an effect on employment. We should watch what happens. If we wind up killing jobs and impoverishing people, at least we'll get a good set of data out of it.

  • Dan T.||

    Haywood's Proxy was a handle I totally made up off the top of my head. No real significance.

    I'd much rather stick with Dan T. but it had gotten to the point where 4 out of 5 posts with my name on them were spoofs.

  • Graphite||

    JasonL, no matter how good a data set you get, there will always be someone out there to point to fast food in the tri-state area and yell "CARD & KRUEGER!" at the top of his lungs.

  • ||

    I am morally imposed to wage minimums or maximums, but I find it hard to get all worked up over this. I guess the fact that it has been so long since an increase, the increase being incremental, and that I honestly believe it WON"T cause massive unemployment.

    I oppose it on moral grounds but sometimes the dire predictions seem overblown to the point of being in Jerry Falwell and Pat Robertson territory.

  • ||

    Would anyone here care to argue with the proposition that the only minimum wage that doesn't increase unemployment is one that has an insignificant impact on what people actually earn?

    IOW, would anyone deny that the moment a minimum wage law becomes anything other than a cosmetic, feel-good soundbite, it will start driving up unemployment?

    I only ask this because I note that most people denying that a minimum wage has had (or will have) any negative effect do so in a context where the minimum wage is largely irrelevant.

  • ||

    Uh-oh...look for hordes of unemployed workers to begin roaming the streets as soon as this takes effect. Remember, up is down and it hurts workers to pay them more.

    Thus with this witty comment, the laws of economics were commited to non-existence . . .

    It hurts POTENTIAL workers to make them artificially expensive. There is a very fine line between knuckleheadness and economics illiteracy.

  • ||

    What I don't get is why Congress is so timid with its economic management. Why only $7.25/hr? I think they should've gone for a nice, round $50./hr. so that EVERYBODY has a chance to earn $100,000 a year (and become subject to the AMT)!

  • Dan T.||

    What I don't get is why Congress is so timid with its economic management. Why only $7.25/hr? I think they should've gone for a nice, round $50./hr. so that EVERYBODY has a chance to earn $100,000 a year (and become subject to the AMT)!

    Or, get rid of it altogether and return to the days of quasi-slavery and the Company Store.

  • ||

    Or, get rid of it altogether and return to the days of quasi-slavery and the Company Store.

    How about a compromise? Set it at $1 per hour so we retain its talisman properties while not effecting disemployment or affecting the economy.

  • ||

    Well, I certainly recommend that Congress raise their pay to 7.25 an hour. Not only that, they should be entitled to "Performance Pay" based on the fact that they are doing "The People's Work". Hey, they must be worth 7.25 an hour, even if the training time seems to be 20-30 years.

  • ||

    Actually, it's very clear what will happen if the Democrats stick to the pay-go rules.

    Because the tax-break portions of the bill don't include offsets, they will be stripped.

  • ||

    RC Dean,

    "Would anyone here care to argue with the proposition that the only minimum wage that doesn't increase unemployment is one that has an insignificant impact on what people actually earn?"

    The increase passed by Congress will give people earning $206 a week for full-time work a raise of over 40%. I'm going to suggest that that's going to make a pretty significant impact for the hundreds of thousands of people earning minimum wage.

  • Dan T.||

    Would anyone here care to argue with the proposition that the only minimum wage that doesn't increase unemployment is one that has an insignificant impact on what people actually earn?

    I sometimes think that minimum wage opponents erroneously assume that the only way to deal with increased labor costs are to lay off employees. But it seems as though you could also raise prices or learn to live with less profit. Also, a worker earning $7 an hour is going to work harder and produce more than if he's making $5 an hour as he's got more incentive, so production should increase as well. Not to mention that if people are being paid more, they're going to have more money to spend so sales will increase as well.

    That's the thing about economics - in the real world, there are almost no limits to the number of factors that have to be taken into account when trying to predict how one adjustment will effect the rest of the economy. That's why well-educated economists quite often disagree about such things.

  • ||

    "What I don't get is why Congress is so timid with its economic management. Why only $7.25/hr? I think they should've gone for a nice, round $50./hr. so that EVERYBODY has a chance to earn $100,000 a year (and become subject to the AMT)!"

    What I don't get is why EMT's only give 10 or 20 ccs of morphine to accident victims, instead of 200-300. That way, they wouldn't ever feel any pain at all!

    Oh, wait, that's right - that would be incredibly stupid. I wonder how old you are, that you've never heard the saying "too much of a good thing?"

  • ||

    Also, a worker earning $7 an hour is going to work harder and produce more than if he's making $5 an hour as he's got more incentive, so production should increase as well.

    It's curious how you and a majority of Congress seem to know this better than the worker's employer...

    That's the thing about economics - in the real world, there are almost no limits to the number of factors that have to be taken into account when trying to predict how one adjustment will effect the rest of the economy.

    This is an argument for less government interference in the economy, not more.

  • ||

    But he has a point, joe. If congress is serious about battling poverty, why throw down a few crumbs? Why not a whole slice of bread?

    And your analogy doesn't fit, unless you are calling MW workers "victims." And even then it's pretty weak.

  • ||

    sage,

    You might want to ask that question to someone who doesn't believe the government should do anything to fight povety except enforce a minimum wage. Let us know when you find one.

  • ||

    Uh, so you're against having a MW?

  • ||

    I don't really understand why congress doesn't just pinpoint the people it wants to help (people with children living below the poverty line) and give them money (via the earned income tax credit or some other means). Why force employers to pay employees some arbitrary rate?

  • ||

    sage,

    Read that again.

  • ||

    "You might want to ask that question to someone who doesn't believe the government should do anything to fight povety except enforce a minimum wage."

    OK. So do you believe the government should do anything to fight poverty except enforce a MW?

  • ||

    I believe the government should things to fight poverty in addition to the minimum wage.

  • ||

    I don't really understand why congress doesn't just pinpoint the people it wants to help (people with children living below the poverty line) and give them money (via the earned income tax credit or some other means). Why force employers to pay employees some arbitrary rate?

    Because the min-wage increase is imaginary. The government CAN NOT increase real wages. Politicians get to look like they are "doing something" for the poor, but in the end the net effect is zero. Because it is a nice bit of political theater that will get good press, maybe win a few votes, etc..

    Where as a new federal aid program isn't imaginary. It costs lots of money, and there is great potential to screw things up. It is something that could easily backfire in a politicians face.

    A politician also knows that it is an easy bipartisan sell... Because the min-wage workers aren't going to really see any wage increase, and min-wage employers will simply tack the cost on to products... the only people who will be harmed by min-wage are the min-wage workers themselves. It is a good way for a Republican to show they are a "Compassionate Conservative", knowing it won't really piss off any of the big corporations donating money to them.

    Raising the minimum wage is the Democrats version of banning flag burning.

  • ||

    The increase passed by Congress will give people earning $206 a week for full-time work a raise of over 40%. I'm going to suggest that that's going to make a pretty significant impact for the hundreds of thousands of people earning minimum wage.

    But in the macro scheme of things, this is insignificant. Its not a raise for very many FTEs, really, because the market has already moved beyond even the increased minimum wage.

    Also, a worker earning $7 an hour is going to work harder and produce more than if he's making $5 an hour as he's got more incentive, so production should increase as well.

    Why does he have an incentive to work harder? His incentive is exactly the same as it was before the new minimum wage - work just hard enough to not get fired.

    Not to mention that if people are being paid more, they're going to have more money to spend so sales will increase as well.

    Of course, prices will also be up as businesses try to cover the increased costs imposed by the, you guessed it, minimum wage. See, also, inflation, evils of.

    I believe the government should [do] things to fight poverty in addition to the minimum wage.

    Me too. Of course, I believe the evidence is that nothing fights poverty more than a strong economy, and nothing stokes an economy more than low taxes and small government.

    But somehow I don't think this is how joe wants to fight poverty. Joe is one of those people for whom nothing is really real unless the government does it.

  • ||

    I believe the government should things to fight poverty in addition to the minimum wage.

    We all want to see poverty eliminated. It is just that the rest of us realize that government intervention almost universally makes poverty worse.

  • ||

    Okay, time to put philosophy into action.
    Nick reduce your pay and all Reason staffers to five bucks an hour.
    When the Feds come call out the Libertarian milita.
    Its on....if you and your boys have the backbone.

  • ||

    joe,

    Thanks for clarifying.

  • ||

    I think I am going to take a moratorium on bitching about the minimum wage. It is, for all practical purposes, a small perturbation in wage values at the margin. In reality it will hurt some slightly, and it will help some slightly, but in the end won't do much. There aren't going to be huge job losses, and no one is traveling to a new income bracket. What it really is, is a political tool. And the Democrats did win, so in a way I am inclined to give it to them.

  • ||

    Hey, good news! The boss just came and announced that everyone working here would get 7.25 an hour. Then he called me aside and told me that I was no longer working here. Whaaaaaaatttt!!!

  • ||

    "I sometimes think that minimum wage opponents erroneously assume that the only way to deal with increased labor costs are to lay off employees."

    Believe it or not, Dan has a point; shortly after the election and the Demos announced their intention to push for a significant increase in the minimum wage, there was a very interesting article in the Wall Street Journal about a new labor scheduling project at Walmart.

    The new program imposes a highly flexible "on call" status for employees. No more of those cumbersome fixed work schedules; employees will be brought on and off line, based on current demand, like any other "just in time" input. Of course, for those people who can't, for whatever reason, accomodate themselves to this sort of randomized schedule, there is always the alternative of... the door.

    It's a fascinating conept; I wonder if it will work out successfully. But, if nothing else, it shifts the decisionmaking burden from the company ("Sorry, we can't keep you on.") to the employee (I can't keep working here. I can't get a babysitter on ten minutes' notice, especially if I'm only going to end up working for an hour or two at a time.")

    I offer this in evidence for those of you who believe that employers cannot or will not respond to a jump in the minimum wage.

  • ||

    One last note on the "its not going to bring on the Rapture" reality of the minimum wage as it currently stands. I think libertarians, more than trying to figure out which party to fusionize with, need to focus on persuading more people. As such I find the hysteria around the MW to be a little self-defeating. Making huge sweeping claims and predictions that wind up falling flat allows opponents to brush your argument aside.


    But as always I could be wrong, and am probably totally full of shit, blah blah blah, and so on.

  • ||

    OK, now that something as tremendously vital as the minimum wage hiked has been passed by the Senate, can the Democratic Congress maybe, please, pencil in the passage of that anti-torture bill?

  • ||

    -P Brooks

    I agree with you on how employers adjust to higher labor costs. If necessary hours get cut, especially overtime, long before anyone gets laid off. Although to be fair I think the Wal-Mart thing has little to do with the minimum wage. They, were interestingly enough, a big supporter of the increase. This is, of course, because they already pay well above it. So it only helps them if their small time competitors have their overhead increased.
    But anyway, I agree with you in general, and that little "smart" scheduling scheme is bound to piss off a few folks.

  • ||

    steveintheknow-

    I had not seen that Walmart had actually come out in favor of the increase; I attribute that largely to public relations. And it's quite likely they see this as another opportunity to oppress their competitors.

    I think it's pretty unlikely that Walmart has many minimum wage employees, even among the part-timers, but they do seem to be concerned with driving down their payroll expense.

    *I have known several people through the years who made a damn good living working for Walmart, but they were bright and ambitious, unlike the many individuals who merely want to get paid for standing around with dumb looks on their faces.

  • ||

    Congrats to everyone we all just got a reduction in pay. This will surely help the economy out. Only people that make more off minimum wage increases are the tax and spenders. Prices will go up, so taxable income will go up on businesses and they will also get more money from income taxes of these newly created wealthy people. If your so slow to get out of a minimum wage job and move up on your own no amount of government intrusion on pay rates will help you. Long live the overlords.

  • ||

    About half the states have minimum wage laws close to or above the new proposed standard, so I really don't think this implementation will have much of an effect at all.

    Interestingly, it's mostly southern and farming states that will be affected. So it looks from here like this is a can't-lose PR op for the blue team.

  • ||

    unlike the many individuals who merely want to get paid for standing around with dumb looks on their faces.

    I want to get paid for standing around with a dumb look on my face. Unfortunatly, I want to get paid significantly higher than minimum wage, which means I have to put in some actual effort on occasion.

  • ||

    Ellipsis do you know what the US Constitution is? Have you ever read it?
    The Feds do NOT have the right to do what they are doing.
    Learn to read, twit.

  • ||

    Since there is currently a large influx of minimum-wage workers from low-wage countries, it seems to me that an increase in the minimum wage is more likely to suppress immigration than to cause unemployment.

    If that's true, then the loser is the Mexican who decides not to cross the border because there is no work for him in the U.S. at minimum wage.

  • ||

    Wow, a bunch of non sequiturs burnt in a big pile of straw.

    Does being snarky violate some tennent of libertarian purity? Because, although I oppose a minimum wage, I don't take myself so seriously that I can't make a few cynical comments about the politics of the whole thing.

    Way to win friends and influence people.

  • ||

    Max, what? What you wrote makes no sense.
    With an increase there is no more of an incentive to hire the illegal alien.
    The loser is going to be the legally hired who now gets fired and replaced by an illegal to cut costs.
    Your a twit Max.

  • ||

    RC Dean,

    I agree, in terms of its macro-economic effect, a minimum wage increase is less than a blip. But it's not supposed to have a macro-economic effect. It's supposed to give the people at the bottom of the ladder a little bit more.

    "Why does he have an incentive to work harder? His incentive is exactly the same as it was before the new minimum wage - work just hard enough to not get fired." You've obviously never been there, but when your boss pays you crap you feel like crap, you hate him, and you slack off. When you get a 40% raise, and you've making slightly more than crap, your attitude improves.

    "Of course, prices will also be up as businesses try to cover the increased costs imposed by the, you guessed it, minimum wage. See, also, inflation, evils of." See, also, R C Dean's argument that a 40% increase in the minimum wage from today's level will have economic effect. Pick side, ok?

    "Of course, I believe the evidence is that nothing fights poverty more than a strong economy, and nothing stokes an economy more than low taxes and small government."
    Believe being the operative word, because you have no evidence of any negative effect on the economy from the minimum wage.

  • ||

    "The loser is going to be the legally hired who now gets fired and replaced by an illegal to cut costs."

    Huh? Hiring an illegal alien doesn't give you a free pass to break the law.

    Maybe you are trying to say that minimum wage doesn't apply in the underground economy. But that doesn't make sense either - being an illegal is neither an advantage nor a disadvantage in the underground economy.

  • ||

    My basic ideas.

    First: If you have a job that you have to work for an hour in order to make enough to buy a loaf of bread then no matter what you make per hour, the cost of bread will match it hour per dollar. If you make $1,000 per hour, bread will be $1,000 per loaf.

    Second: Imagine that a man with no painting skills and a need for $100 rent money offers to paint your garage for $100. You agree and both of you are happy.

    A government agent then appears and tells you that you have to pay him $400 in order to meet the minimum wage requirements. You don't want to pay $400 for an unskilled painter to paint your garage so you cancel the deal with the would be painter. You're unhappy, the painter is unhappy (and now homeless), but the government agent is happy as he has saved the guy from "slave" wages.

  • ||

    "The increase passed by Congress will give people earning $206 a week for full-time work a raise of over 40%."-joe

    Or will get them laid off, which will be significant impact as well.

    The significant impact was meant on a large statistical level, not an individual one. Trying to conflate the two is stealing an intellectual base.

  • ||

    "When you get a 40% raise, and you've making slightly more than crap, your attitude improves."-joe

    When you get a raise because your employer appreciates your work may be an incentive to work harder. Getting a raise because the government threatens your employer does not seem to have the same type of incentive. You are not getting a raise because you have proven yourself a valuable asset to your employer, you are getting a raise just because he has chosen not to let you go.

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