Minimum Wage! Hyaaah!

The Wall Street Journal's Jeanne Cummings has a report on an overlooked electoral phenomenon. Democrats are putting minimum wage increases onto state ballots as initiatives, hoping to ride them to victory the way Republicans (were perceived to have) rode gay marriage bans to victory in 2004.

Democrats first tested the minimum-wage issue in Washington state in 1998, a year after Congress raised the rate to $5.15 an hour. The initiative passed easily and raised the state's minimum wage to $6.50 an hour. The initiative was the highest vote-getter of all issues and candidates. Post-election polling suggested it boosted turnout by four percentage points, which helped widen the victory margin of incumbent Democrat Sen. Patty Murray and paved the way for Democrats to pick up eight state House seats and win control of the state Senate.

Added plus: if Democrats can make the Sun belt as economically inhospitable as the Rust belt and Northeast, maybe the blue states will stop hemorrhaging voters.

Comments

[jf]

$6.50 is not enough. They should raise the minimum wage to $10,000 per hour. Then we'll all be rich.

[thoreau]

I'd like to propose my own ballot initiative: Prop 69, which would provide introductory microeconomics textbooks for all elected officials.

[joe]

Uh, yeah, look at the skyrocketing poverty rates in states that have higher minimums, like Massachusetts.

Oh, wait, nevermind.

[Jason Ligon]

Libertarians are often guilty of over selling this argument, as joe suggests.

The more accurate version of 'minimum wages cause unemployment' should read 'minimum wages uniformly raise the cost of doing business'.

That amount in some markets may be passed through to the consumer as higher prices, in other markets businesses can compensate by turning off the a/c, and in still others they just have to eat it.

Bottom line, it is harmful, but small increases cause small harm that can be swamped by other factors. The argument that it is stimulatory is fallacious. It is the Democrat version of $100 gas credits.

[Greg]

Does anyone have any evidence that raising the minimum wage raises the unemployment rate, or lowers the poverty rate? As far as I know there is no conclusive evidence that it makes any discernable difference in either.

[phocion]

Minimum wage causes unemployment for those who cannot produce goods and services worth as much as the minimum wage. Mainly poor teenagers. Of course, if the wage were raised high enough, it would begin pushing other groups out of jobs too. Teenage unemployment generally tracks closely with minimum wage; other economic indicators often have so many other factors going into them that it's hard to conclusively say that the wage is or is not having an effect on them. We could say the overall economic impact is small, though the societal impact of having lots of poor unemployed teenagers can be seen in any high crime area.

[jf]

Well, we could just print more money, then give it to businesses to compensate for the higher minimum wage. I don't think that could cause any problems.

[Warren]

This is where the party ends
I can't stand here listening to you
And your racist friend
I know politics bore you
But I feel like a hypocrite talking to you
And your racist friend

It was the loveliest party that I've ever attended
If anything was broken I'm sure it could be mended
My head can't tolerate this bobbing and pretending
Listen to some bullet-head and the madness that he's saying...

[joe]

"Teenage unemployment generally tracks closely with minimum wage"

No, not really. States with higher minimum wages, like Massachusetts, don't have higher teenage unemployment. States with very high teenage unemployment, such as Mississippi, don't have higher minimum wages.

[thoreau]

Small changes in the minimum wage don't always produce easily quantified effects, because you can't easily hold all of the other variables constant.

A measurable effect would probably be easier to observe if there were a big change in the minimum wage. Say, $15 minimum wage.

I don't think anybody in his right mind would propose such a thing.

[Greg]

Teenage unemployment generally tracks closely with minimum wage

Can you link an article or study that demonstrates this? I am curious.

[Egirl]

*smiles at the TMBG reference*

[bob]

The minimum age is silly because with the price of gas, subburban sprawl, and the curious lack of public transport, soon nobody will be able to afford to get to work anyway.If some goody two shoes doesn't come up with a government plan to feed the hungry, maybe we can cull some of the losers out. Trouble is everybody is so fucking fat that will take a long economic downturn. Oh well, I can wait.

[Karen]

Also smiles at the They Might Be Giants reference. It makes Monday less dreadful.

If you will permit me one small threadjack: my older son said at dinner last Sunday, "I wish Monday were a guy and we could beat him up."

I hope things are better for the rest of you.

[Timothy]

Effect of minimum wage: teenagers get more money, by and large.

Effect of small hike: Slightly fewer teenagers get slightly more money.

Overall: Not much of an effect on the overall economy, really.

That said, I think the reason is that by-and-large the minimum wage just isn't an effective price floor. Anecdote warning, but here in SA even burger flipping pays more than the minimum wage. I'm guessing this is less true in, say, Oregon where the minimum wage goes up at the rate of the CPI every year (and there's also not a lower one for tip earners).

[Ironchef]

Whatever you think of the minimum wage, it's much better that they (me included) promote this at the State level, rather than the Federal level.

[joe]

Timothy,

Only teenagers working in fields in which labor is a very elastic expense earn minium wage? Fascinating. You should learn some Spanish, so you can tell that to people working in chicken processing plants in the South.

[JD]

re: Mississippi - Doesn't Mississippi have high unemployment overall? There is this thing called "correcting for other variables", you know...

[sage +P]

I was going to ask the same thing, JD. But really, if politicians feel that businesses can afford to pay whatever they mandate, why not make the minimum wage $20/hr? Poverty would be gone overnight, right?

[joe]

"Supporting an increase in the minimum wage" = "believing businesses can afford to pay whatever they mandate" sage +P? Really?

I'll tell you, it's almost as if the people behind this latest round of wage hikes (and every other minimum wage proposal in history, btw) actually were cognizant of the problem to imposing additional costs and business, and sought to balance two competing interests.

[Jennifer]

If it were only teenagers making minimum wage I'd be less sympathetic. The problem is, for all that raising the minimum wage increases the cost of doing business, at the same time I'm pretty uncomfortable with the idea of a huge percentage of Americans holding down full-time jobs and still not making enough money for bare survival.

[Steve Horwitz]

Two quick comments:

1) What raising the minimum wage does in places where it is a binding price floor is force employers to trade-off wage expenses against other margins. That might mean reducing the total number of workers hired, or the number of hours each works. But it also might mean reducing employee discounts, break time, free uniforms, or other non-wage benefits. It also might mean cracking down on less than full effort by employees in order to squeeze more productivity in the face of a higher wage. It might mean ALL of these things. The point is that raising the minimum wage reshuffles the whole compensation bundle in ways that likely harm more people than it helps, including those who were happy with the current bundle. Anything that reduces the flexibility of compensation is likely to make workers worse off.

2) Historically, changes in the minimum wage best track the black:white teenage unemployment ratio, rather than the overall level of unemployment. The overall level has too many other influcences, but the b:w teenage ratio is very sensitive to changes in the minimum wage. When the MW goes up, the b:w ratio goes up. Walter Williams in *The State Against Blacks* provides the data up til the early 80s, and the trend has continued from there.

[Steve Horwitz]

A further comment: less than 25% of minimum wage earners are the primary income earner in their household. In fact, teenagers who are secondary or tertiary earners in their households are the most common group earning the minimum wage.

[sage +P]

"I'll tell you, it's almost as if the people behind this latest round of wage hikes (and every other minimum wage proposal in history, btw) actually were cognizant of the problem to imposing additional costs and business, and sought to balance two competing interests."

Fair enough, joe. But would you say then that the balance has tilted toward favoring businesses, since someone making MW would be under the poverty line? One could then say that *all* politicians are in the pocket of business interests, and put the financial concerns of their constituents second.

[Timothy]

Jesus H Christ on a pogo stick, joe, my point was that I think it's low enough that not all that much of the labor pool is affected, therefore the net effect is small and it isn't much use as a talking point except at the extremes.

[sage +P]

"I'm pretty uncomfortable with the idea of a huge percentage of Americans holding down full-time jobs and still not making enough money for bare survival."

What a huge incentive to better one's self.

[Timothy]

Further, I agree with Senor Horwitz's points.

[Jennifer]

What a huge incentive to better one's self.

Doesn't change the fact that there are huge numbers of jobs which need to be done but will still pay a wage that isn't enough to live on.

[Jennifer]

What a huge incentive to better one's self.

Doesn't change the fact that there are huge numbers of jobs which need to be done but will still pay a wage that isn't enough to live on.

[joe]

Timothy,

The size of the portion of the workforce making minimum wage is a wholly different argument than the one you made, which was about the age of the portion of the workforce making minimum wage.

As far as the numbers of people effected by a wage hike, it is significantly larger than those at the minimum, because increases in the minimum wage results in raises for people just above the minimum as well.

sage +P, I'm not sure what you're asking. The balance is certainly more towards the capital end than it was in, say, 1977.

[sage +P]

"Doesn't change the fact that there are huge numbers of jobs which need to be done but will still pay a wage that isn't enough to live on."

Yet the jobs *are* being done. And the people doing them are obviously still living, yes? And hopefully trying to position themselves for something better. Like a move to an area with better prospects.

[Jersey McJones]

"Right to Work" states amd states with very low minimum wages and/or little or no labor regulation are invariably shitholes with poor schools and services across the boards and relatively very low standards of living.

It is to the proven failure of laizze faire libertarian economics.

JMJ

[sage +P]

"sage +P, I'm not sure what you're asking. The balance is certainly more towards the capital end than it was in, say, 1977."

Senator Pander wants to increase the minimum wage a big whopping 25 cents to (???). If this wage hike goes into effect, a person working full time at this wage is still under the poverty line, right? If they are serious about a "living wage," why not raise it to a level that would put them at or over the poverty line? Couldn't you say that anything else is just bread and circuses?

[metalgrid]

Uh, yeah, look at the skyrocketing poverty rates in states that have higher minimums, like Massachusetts.
Oh, wait, nevermind.
Comment by: joe at May 1, 2006 09:18 AM

Well, as long as it's the people who can't afford the prices in Massachusetts moving away, it's fine.

It's called exporting the poor to another state.

[joe]

sage +P,

1. Politics is the art of the possible.

2. Minimum wage hikes are never just 25 cents/hour.

3. At a certain point, too high a wage hike too fast would cause a serious problem.

[joe]

metalgrid,

The population loss that's happening in Massachusetts is happening in the Western end of the state, where housing prices are Arkansas-low, but jobs are Iraq-scarce. Job growth continues to be strong in Massachusetts overall, but it is concentrated in high-housing-cost Eastern Massachusetts.

[.]

my point was that I think it's low enough that not all that much of the labor pool is affected, therefore the net effect is small and it isn't much use as a talking point except at the extremes.

These minimum wage laws also contribute to the corporatization of America. Large employers like McDonald's and Wal-Mart already pay slightly more than the minimum wage; it's the mom-and-pop places that feel the biggest hit. Joe's Burger Joint closes down and maybe a Burger King opens up. And once in a while a Jose's Casa Burrito opens with a few illegals in the kitchen. Mom-and-Pop retailers can survive in the UMC areas where they can sell higher-priced boutique items, but they're dead in the lower-middle-class areas unless they can get around the minimum wage or are small enough not to need any employees.

[joe]

I earned minimum wage at McDonalds, ..

As do many workers in industrial operations, such as meat packing plants, across the oh-so-economically vibrant, pro-employer states like Mississippi, Arkansas, and South Carolina.

[Jason Ligon]

"It is to the proven failure of laizze faire libertarian economics."

This is too strong a statement. It is a mischaracterization of what happens in the same way that "minimum wages cause unemployment" is a mischaracterization.

You can respond to mandated increases in labor costs in a lot of ways, as Mr. Horwitz mentioned above.

[Russ 2000]

The population loss that's happening in Massachusetts is happening in the Western end of the state, where housing prices are Arkansas-low, but jobs are Iraq-scarce. Job growth continues to be strong in Massachusetts overall, but it is concentrated in high-housing-cost Eastern Massachusetts.

I'd bet the cries of "increase the minimum-wage" in Mass. are coming from the eastern part of the state, too.

I was thinking of retiring to western Mass. It's beautiful country and apparently it's getting more affordable. I'll just need to brush up my Spanish and watch out for the cops.

[rhywun]

maybe the blue states will stop hemorrhaging voters

I hope that rotten article David Weigel linked to was meant as a joke. The writer's attempt to paint liberals as racists is beneath the usual level of discourse around here.

[sage +P]

"Democrats first tested the minimum-wage issue in Washington state in 1998, a year after Congress raised the rate to $5.15 an hour. The initiative passed easily and raised the state's minimum wage to $6.50 an hour. The initiative was the highest vote-getter of all issues and candidates."

That's because anything that passes in Seattle will go for the whole state, even if Seattle is the only area in favor of something. They are notorious nanny-staters.

[Robert]

But nobody's commented yet on the point of the WSJO article: that partisans are counting on the ability of ballot questions to get out the vote. It said that to prevent a Democratic GOTV effect, the Republican legislators in at least one state passed a minimum wage increase to head off a ballot initiative on the subject.

How about, in states that don't have voter initiatives, legislators putting referenda on the ballot to GOTV?

[Jersey McJones]

Jason,

The point is that low wage states fair poorly against higher wage states in almost all catagories. The minimum wage raises the bottom - a far better way of truly growing the economy than the proven failure of trickle-down pull-from-the-top policies.

JMJ

[Isaac Bartram]

Jersey,

Methinks you may have some carts pulling horses there, old boy.

[joe]

Russ200,

"I'd bet the cries of "increase the minimum-wage" in Mass. are coming from the eastern part of the state, too." No, not particularly. Western Mass's Congressional reps are John Olver and Richard Neal, if that means anything to you.

"Getting more affordable" is one way of putting it, I guess. Just look outside the area immediately around Amherst and Northampton. It is a lovely area, if you can support yourself there. Lots of open country, nice town centers. I don't get the cops-n-Spanish joke, though.

[sage +P]

"The minimum wage raises the bottom - a far better way of truly growing the economy than the proven failure of trickle-down pull-from-the-top policies."

You know, Jersey, I really like how you throw out words such as 'proven' and 'everyone knows' yet I have yet to see you post a single source to back up anything you claim.

[Pirate Jo]

"What a huge incentive to better one's self."

"Doesn't change the fact that there are huge numbers of jobs which need to be done but will still pay a wage that isn't enough to live on."

Because obviously not everyone will choose to better him or herself. The laws of supply and demand apply to human beings the same way they apply to anything else on the planet. If you have an enormous pool of mouth-breathing dullards who don't have the skills or motivation to do anything but chase a stick, you can't expect stick-chasing to pay that great. Those folks will most likely just breed more mouth-breathing little dullards, since it is the only "productive" thing they can visualize themselves ever doing. What's funny is to watch their shock and self-entitlement-fueled horror when a hardworking Mexican is willing to do their job for half the money.

[thoreau]

Jersey-

It could be that the minimum wage is only set as high as a state can "get away with" (i.e. not lose too many jobs). States with few other advantages will desperately try to attract jobs with lower minimum wages, while places that have more advantages will be able to set higher minimum wages.

We need to remember that regulation is not the most important determinant of economic growth, or at least it isn't in a society like ours, where the market is (all things considered) fairly free compared to the rest of the world. NYC, with Wall Street, a major international port, critical masses of talent in media and advertising, and various other advantages, will always be a place where companies are willing to do business. Mississippi has much less to offer, so a lower minimum wage may be a desperate bargaining chip.

And while trickle down may not live up to all of its promises, minimum wages don't seem to do all that much for job creation.

[joe]

Jersey,

While it's worth pointing that out, it doesn't lead to the conclusion that minimum wages and other liberal economic policies caused the superior economies in blue states. There's a chicken-egg problem here, in that states with the most developed economies are naturally going to be the ones to pass liberal economic policies.

Which is what we see happening in places like Nevada, Arizona, New Mexico, Colorado, and Montana.

[Jersey McJones]

No, Isaac. If by that you mean that the only reason states with higher MWs and labor standards are better off because they were in the first place regardless of wages, well then what does that tell you? If you mean that because they attract workers who would rather live in a more civil and developed environment, then you have a point - the one I am making.

JMJ

[sage +P]

I love it. Pirate Jo not only talked about the elephant in the room, but he dragged it outside and put a bullet in its spine.

[Ken Shultz]

The point is that low wage states fair poorly against higher wage states in almost all catagories. The minimum wage raises the bottom - a far better way of truly growing the economy than the proven failure of trickle-down pull-from-the-top policies.

It seems to me that the fastest growing states are the ones benefiting the most from illegal immigration, a job force all but immune to the minimum wage.

[Jersey McJones]

Joe, though I'm not sure what to say about Montana, the other states you mentioned may seem like big rural agro states but they are not. They are most empty, interspersed with higher end urban areas. These areas are directly competing with the higher end states. Intel is in Albuquerque, for example. Where these states run into trouble is in their large agro sectors, where the Tom Sleazebag Tancredos of the world complain about illegals but never about the big agro there that hire them.

JMJ

[Jersey McJones]

Ken, "growth" is a highly open-ended term. One man's growth is another man's disaster.

JMJ

[Lurker Kurt]

I'm pretty uncomfortable with the idea of a huge percentage of Americans holding down full-time jobs and still not making enough money for bare survival.

Jennifer, this statement puzzles me.

Do you have a source for this "huge percentage"?

Since home ownership is at an all time high, I would think that is a pretty strong indication that the economy is strong and that a large percentage of people are doing well.

[R C Dean]

There's a chicken-egg problem here, in that states with the most developed economies are naturally going to be the ones to pass liberal economic policies.

Just so. Most liberal policies of all kinds (from environmental regulation to the welfare state) are, essentially, luxury goods than are unaffordable to any but the most wealthy societies.

Which makes it kind of ironic that they are usually pitched in terms of human rights and helping the poor.

[Jennifer]

Since home ownership is at an all time high, I would think that is a pretty strong indication that the economy is strong and that a large percentage of people are doing well.

Maybe. We'll see how many people remain homeowners when interest rates go up and their interest-only ARMs readjust.

If you have an enormous pool of mouth-breathing dullards who don't have the skills or motivation to do anything but chase a stick, you can't expect stick-chasing to pay that great. Those folks will most likely just breed more mouth-breathing little dullards, since it is the only "productive" thing they can visualize themselves ever doing.

I'm a misanthrope too, and I have no doubt that a lot of poor people are poor because of their own foolishness, but at the same time there ARE a huge number of jobs that don't require uch skill but nonetheless ARE necessary, and somebody is going to have to fill those jobs.

[Shem]

A further comment: less than 25% of minimum wage earners are the primary income earner in their household. In fact, teenagers who are secondary or tertiary earners in their households are the most common group earning the minimum wage.

How close does a wage have to be to the MW to get caught in that statistic? In lower-end jobs where turnover is expected to be lower than the local McDonalds, often employers will start someone at 25- 40 cents above MW so that if it goes up they'll have some breathing space before they have to worry about it. Does that statistic take only jobs that are exactly at the MW into account, or is there some accounting for this situation.

[Karen]

I'm sure that minimum wage laws have some harmful effect on the economy, but, honestly, I just can't care very much. I'll worry about the injuries done to the common good from such regulations after we have eliminated all the other laws and regs that dump boatloads of swag on metastatic corporations and their overpaid CEO's. Until that time, I can't oppose something that gives a tiny benefit to those at the bottom of the wage scale.

[Shem]

I have to say the number of people here who are willing to just automatically assume that poor people are lazy and therefore worthy of being treated as subhuman is more than a little horrifying.

[sage +P]

Actually, I have to agree with Karen. Let's grab the low-hanging fruit first. And squeeze the juice right out of it.

[MikeP]

I have to say the number of people here who are willing to just automatically assume that poor people are lazy and therefore worthy of being treated as subhuman is more than a little horrifying.

I have to agree. Those who are promoting laws that make it illegal to work if one's skills aren't worth some minimum wage should not treat such people as subhuman. Even those whose skills are not in high demand have a right to work -- a right that should not be denied or priced out of the market by government fiat.

[mitch]

Like Robert, I am disappointed that nobody has adressed the point in the article that hasn't already been talked to death on this and other libertarian boards: will this strategy get the vote out for the Democrats?

I think the psychological logic behind the straegy is good; there are lots of people who don't pay attention to politics and so don't vote, or who pay enough attention to think that they would be wasting their time furthering the career of some rich jerk off in Washington or the state capital. These people find it easy to ignore the pleas of friends and strangers to go to the polling place and pull the lever for "Senator Jackass" or whoever. But it will be harder for them to ignore an opportunity to vote themselves or their friends a raise. (Remember, according to joe and others, an increase in the minimum wage leads to increases in the wages of workers earning slightly above minimum wage.) In addition, people who think like Jennifer, that it is a disgrace that some people in the US are poor, will see voting for the measure as a way to give charity without actually having to open their own wallets.

I think the minimum wage initiatives will be successful in getting to the polls people who otherwise would not have voted, (assuming that the Democrats sell the idea with a minimum of competence, which maybe I should not assume) and that the Republicans will suffer.

[D.A. Ridgely]

There are various ways of looking at minimum wage laws and their effects. They can be seen as 'punitive' taxes on employers unlucky enough to need only or largely unskilled labor, transfer payments from those employers to their employees (cutting out the government agency middleman), artificial barriers to both employees and employers who would voluntarily contract for a productive purpose in their absence, a marginal increase in cost of all goods and services (hence a marginal reduction in GDP and average personal income) whether the employer foregoes having the work done, effects 'savings' elsewhere or passes on the increased cost to customers, etc.

As others have noted, it is all but impossible to factor out all the other variables, so as long as minimum wage levels are close to the bottom of the voluntary bottom wage level the effects will be difficult to discern. (Welfare and other social 'safety net' programs further skew the situation.) In any case, as economist Steven Landsburg (no flaming liberal) has noted, "the power of the minimum wage to kill jobs has been greatly overestimated. Nowadays, most labor economists will tell you that that minimum wages have at most a tiny impact on employment."

Landsburg's position is that the problem with the minimum wage is that, as noted above, it tends to place the entire or at least a disproportionate burden of income redistribution on a certain segment of employers. It would be distributively more just simply to raise the earned income tax credit.

I don't endorse minimum wage laws or earned income tax credits, but it seems to me the practical import of these sorts of debates would be better focused on those sorts of policy discussions than over whether classical microeconomics somehow answers the mail here.

[kebko]

Here's a link to a study:

http://www.ppic.org/content/pubs/cep/EP_705SAEP.pdf

From my quick perusal, it seems that they found that the poorest workers had high increases in unemployment, while some other workers had some gains in income. Seems like they found exactly what you'd expect to find from a "thought experiment" on the topic....a mixed bag of results for poor workers & higher costs for consumers.

[kebko]

Here's a link to a study:

http://www.ppic.org/content/pubs/cep/EP_705SAEP.pdf

From my quick perusal, it seems that they found that the poorest workers had high increases in unemployment, while some other workers had some gains in income. Seems like they found exactly what you'd expect to find from a "thought experiment" on the topic....a mixed bag of results for poor workers & higher costs for consumers.

[Ken Shultz]

Ken, "growth" is a highly open-ended term. One man's growth is another man's disaster.

Yeah, I'm just not sure we should be the guys deciding which is which.

Maybe it should be the single mothers out there lookin' for low cost child care. ...or people for whom expenses like food take a large chunk of their pay. ...by what right do we make decisions for these consumers?

...and by what right do we decide that higher wages and less demand for low wage labor is better for workers than anything else? ...shouldn't those workers and the people that hire them be making those decisions?

China has a middle class of more than 200 million now, and it's growin' like mad. I can't imagine telling some peasant in the countryside that he shouldn't go to the city 'cause there's no minimum wage there and that's not the right kind of "growth".

...I can't imagine saying that to a low wage worker here in the United States either. ...that he shouldn't be allowed to take advantage of whatever opportunities people are willing to offer him. I also don't understand policies aimed at helping the poor that also aim to increase the cost of living.

[anon2]

Shem,

What about people who don't believe lower-skilled people should be able to choose jobs that pay less than an arbitrary rate? Isn't that amazingly condescending?

I doubt there are few people contributing to this board who couldn't make more money if they put some effort into it, either by taking a second or third job, taking a more demanding job, spending more free time developing skills, networking or doing other things to either increase the number of hours worked or to increase the amount that they get paid per hour. However, it's extremely rare that people try to maximize their income.

High skilled people are able to take lower salaries for whatever reasons they see fit. Some high paying jobs are simply too stressful, require too long of an education, are not congruent with one's ethics, require one to leave one's house, etc. In other words, some people will take a lower salary in exchange for being able to do something closer to their hearts, closer to their home, or closer to the talents they've already developed.

The lower your skill set, the less flexibility you have and minimum wage laws make the problem worse.

People are allowed to watch TV, which pays nothing, but are prohibited from spending the exact same time doing something that they'd prefer to do if they were paid $2/hr. to do it. People think this is normal and is a good thing and they don't even see the condescension.

[Thomas Paine's Goiter]

What's funny is to watch their shock and self-entitlement-fueled horror when a hardworking Mexican is willing to do their job for half the money.

Dammit, there are lazy Mexicans too! I'm sick of being told how hard-working Mexicans are. Like any other ethnicity, there are hard-working ones and there are lazy ones. There are tightknit mexican families and there are broken down mexican families. There are god-fearing, wonderful mexican folk and there are mexicans out there committing rape and murder.

It's not that the Mexican is hard-working taking the dullard's job, it's that he'll do it for minimum wage.

[anon2]

Minimum wage has been with us long before most of us here were born. It's first nationwide establishment came, IIRC, with NIRA in 1933. NIRA was a horrible prescription that made a bad economy much worse.

We have no idea what sorts of below minimum wage jobs we might have in the absence of these laws. Technology has changed greatly. Think about anything you do for fun or that you pay to do. There's a chance that some enterprising person could figure out a way to pay you a small amount to do that.

We'll never know. There's no incentive for people to come up with new business plans that involve paying people small amounts of money to do things that they might do anyway. Furthermore, if you're already making substantially above the minimum wage, a few extra dollars probably wouldn't be worth whatever red-tape came with these hypothetical jobs.

The point is, by prohibiting people from working for less than the minimum wage, you're prohibiting potential employers from creating jobs that would be attractive below the minimum wage. Obviously such jobs might exist, otherwise there would be no need to ban them.

[Jason Ligon]

"Ken, "growth" is a highly open-ended term. One man's growth is another man's disaster."

I don't know what this means. I'm tempted to trot out the old buggywhip salesman thing, but surely you are referring to something else?

[James Anderson Merritt]

Here in Santa Cruz CA, proponents have qualified a citywide minimum wage of $9.25 for the ballot. Interestingly, volunteers were reportedly having problems getting the necessary signatures, but they brought in paid petition circulators and got the 6000+ signatures deemed sufficient to withstand signature qualification scrutiny. I hope this means that voters won't jump to approve it, but around here, ya never know.

The argument that seems to be getting the most traction is that someone who works hard all day deserves to be able to live in the community where he or she works. To a lesser extent, people are susceptible to the argument that the minimum wage doesn't really matter, one way or the other, but in that case, isn't it better to give the hardest working among us a few more bucks?

There doesn't seem to be much point in making a fact-based economic argument. I've tried this in local fora, and with friends and neighbors who seem interested in the subject, to the point where I am weary of it. The evidence of experience seems to be mixed, and the harm of the minimum wage seems to be so small in people's eyes, that they are willing to give a minimum wage hike the benefit of the doubt.

Some people should simply not have the power to make financial decisions for others. It's sad that the Democrats are working so hard to enshrine the idea that everybody should "democratically" make financial and business decisions for everybody else. You alienate others when you call this idea "immoral," but really, that's what it is, demonstrating that we will never eliminate corrpution in government, even if (especially if!) we "evolve" to something closer to a pure democracy. Individual voters are as corrupt as the people they elect, even if the corruption is masked and excused as "compassion" for the most needy of the working class.

[R C Dean]

Is anyone willing to make the case that minimum wages are good for the economy? That, on net, they result in a bigger economy with faster growth? Certainly, there are lots of reasons to believe they act as a drag on the economy, but can anyone argue that they actually boost it?

Or is the sole argument for the minimum wage based on redistributive equity?

[Thomas Paine's Goiter]

JMJO:

http://www.nrtw.org/rtws.htm

Check that map out and tell me which color contains all of the nation's fastest growing state economies.

[Jason Ligon]

Concerning Karen's comment:

Current minimum wage causes some small harm. A small rise in the minimum wage would cause a small rise in the harm.

My concern is what would happen if the Living Wage people get their way. Then we have a problem.

Also, as libertarians, we should be concerned about the practical effects of this. It is a purely political handout in exchange for votes. Expect the other coalition to match and raise a little.

[Jersey McJones]

RCD, if you see them in a vacuum, MWs don't mean much either way. Ask a person who makes a buck an hour more because of a new law, and they'll tell you, "yes." As for "growing" the economy (yet another vacuus and meaningless notion), sure it could. It increases cunsumer power.

JMJ

[D.A. Ridgely]

As for "growing" the economy (yet another vacuus and meaningless notion), sure it could. It increases cunsumer power.

Simply false (and poorly written). Robbing Peter (an employer) to pay Paul (a minimum wage employee) no more increases consumer power than street muggings do.

[MikeP]

Ask a person who makes a buck an hour more because of a new law, and they'll tell you, "yes."

Ask a person who was cut from full-time to part-time because of a new law, and they'll tell you, "no."

And the person who wasn't working before because he didn't have the skills or experience for the then minimum wage and now is a dollar per hour further away from working... you probably don't even think to ask him, do you.

[Jersey McJones]

Thoms Sever Pain,

"Growth" means nothing. Only a fool (ie: most Americans) would give a rat's ass about such valueless numbers.

Look at it this way.

An economist and a regular dude are watching two people locked in a controlled room. One person has $1,000,000 and the other guys has $.50. The economist would say, "The average wealth in that room is $500,000.25." The regular dude says, "Hey look - a rich guy and a poor guy!" Over a year the millionaire gains $500k on investments on his million. The poor man gains $.25. The economist then says, "Over the past year the average wealth in the room rose by almost 50%." The regular dude says, "Gee, I wonder when that poor guy is gonna kick that rich guy in the nuts." The point is that "growth" tells you very little. For example, the "president" was braging about job numbers recently - this while illegal immigration is through the roof. Or another example, the president was bragging about 5% growth in the last quarter - that growth, of course, included more record-breaking profits from high oil costs. The fact is that American consumer debt is 10% greater than our disposable income. That's not growth. So take your insipid "growth" and stuff it where the economists don't shine.

JMJ

[Jason Ligon]

JMJ:

That you believe economic growth to be a vacuous concept explains a lot.

To avoid speaking past other people, you should probably make that explicit up front in your posting. I'm not really trying to be snide here, but you are speaking to people, me among them, who not only assert that economic growth is real and measurable, but that it is the single most powerful force for human good ever identified on this planet. It lifts people out of brutal starvation and subsistence living, it lengthens lives, it makes everyone less subject to the whims of nature.

A good portion of the arguments you read in these parts, or on Marginal Revolution, or on Brad Delong, will carry that assumption.

[Lurker Kurt]

JMJO:

http://www.nrtw.org/rtws.htm

Check that map out and tell me which color contains all of the nation's fastest growing state economies.

Oh, oh, TPG has just unleashed a fact.

Will brandishing facts have the same effect upon trolls as crosses do to vampires?

[Another Lurker]

I don't need to look at Thomas Paines link (even though I did). I live in Georgia and people are moving here hand over fist from New York and New Jersey. One is sitting next to me right now.

They all complain about cost of living. Jersey, you want to see what attempts to drive wages higher than the market does to a city. Drive around your own state. Businesses left New Jersey because they got tired of all the bullshit laws. It was not longer profitable. So they moved down here and hmmmm, funny, folks are moving where the jobs are.

Right to work means I only have to deal with one giant organization. The company itself, as opposed to the company AND the Union that is controlling and exploiting the workers. I'll stay here thank you very much. The more labor laws there are, the harder it is to get a job. Did you check out France recently? Seen their unemployment numbers? Interesting.

D.A. has it right, if you rob Peter to pay Paul, Paul is going to vote for you.

[lannychiu]

These minimuim wage arguments are always quite fascinating for the creativity of arguments generated on either side. What is even more intersting, is that most of the arguments sidestep the underlying issue. Which is simply,

"What is the effect of a price increase of an input into a production process".

IF you make it more expensive to use low wage work, will you you use more or less of it? The conventional economic argument is unambigious, an increase in the price of an input will decrease it's use.

Does one imagine that the large oil spike in recent years will convince firms to use more oil to produce goods? If one believes that the increase in oil prices will convince firms to use less oil, why will firms treat the low-wage input differently?

That is not to say this can't be proven false, but if you want to make the claim that unemployment won't increase with a rise in the Min Wage, then you really need a truly ingenious argument. To my mind, none of the research/ideas that have been put forward come anywhere near this standard.

But this is certainly possible, after all, Einstein disproved some of Newtonian mechanics with his brilliant work.

[Jersey McJones]

The point is that "grwoth" tells you very little. Growth in what sectors? For whom? How many? How does it effect other sectors? Etc.

"Growth" is a catch word for dummies.

JMJ

[sage +P]

"Oh, oh, TPG has just unleashed a fact."

Don't expect JMJ to reply in kind. See my earlier comment on that topic.

[Ken Shultz]

I agree that the question is essentially one of quantities. ...but some people don't think in those terms--but they still get to vote. ...and our policymakers are aware of that.

...so I add that decisions about the qualitative effects of increased costs should be made by actors rather than spectators.

If the cost of child care goes up, for instance, what's the qualitative effect of having fewer women in the workplace? The negative effects of a hike in the minimum wage on urban, African-American kids, other things being equal, is well documented (if not undisputed), what are the qualitative effects of having fewer high school graduates with work experience?

I wish they taught Econ 101 in high schools as part of the core curriculum, but they don't. ...so not everyone follows the clear, rational, quantitative arguments against the minimum wage. ...but they can still vote. ...and policy makers are aware of that. So, we can make the same points in a qualitative kind of way. ...no?

[R C Dean]

As for "growing" the economy (yet another vacuus and meaningless notion), sure it could. It increases cunsumer power.

I have no idea what "increases consumer power" means, but I'm pretty sure it doesn't have anything to do with whether minimum wages are a net drag or a net boost for the economy.

I think we can take it as read that minimum wages are a net drag. The only argument seems to be over whether the drag has some significance, or whether it is de minimis. Which in turn would seem to be a function of how high the minimum wage is.

On a narrower question, has anyone seen any research or analysis as to whether the minimum wage is a net gain or a net loss for the bottom, say, quintile of American workers? Do the costs of the minimum wage for the economically marginal (lost jobs, lost benefits, reduced work hours, and higher prices) offset the increase in earnings to those whose wages would otherwise be less than minimum wage?

[rhywun]

I live in Georgia and people are moving here hand over fist from New York and New Jersey.

How long till crowding leads to the same problems that caused them to escape the North? Atlanta can only sprawl out so much before it becomes intolerable to live there.

[Another Lurker]

"How long till crowding leads to the same problems that caused them to escape the North? Atlanta can only sprawl out so much before it becomes intolerable to live there."

That is a good point. The problems would be different than what is causing them to move from the North which is high cost of living and not enough jobs. In Atlanta the worst thing is living too far from your job and sitting in traffic all day. But that is getting off the subject of minimum wage a little bit. LOL

[Another Lurker]

""Growth" is a catch word for dummies."

Well all I know is people are moving here, property values are going up, aside from the hideous traffic most folks generally like Atlanta. Let's hear about the growth areas in Newark again Jersey? That ought to be a short post. It's funny that all the places that had all the big Unions in the Northeast are all shitholes to live in now. Maybe they did more harm than good in the long run? Maybe not. All I know is it is easier for me to get a job and earn a living in a "right to work" state. I don't have to ask permission of whichever Union to get a job and control my own destiny thank you very much.

If Growth is a catchword for Dummies Jersey? God only knows how friggin stupid you have to be, since Newark hasn't known growth in any form in decades. Sorry to be trashing your town, but don't invite it if you don't like it.

[Jason Ligon]

""Growth" is a catch word for dummies."

Egad. See: Scottish Enlightenment

Dummies like Hume and Smith and every economist since? Dummies like every central bank, every major corporation, leaders in every developed country including China?

[Daniel]

Why do you people bother answering JMJ's absurdities?

Just ignore him, maybe he'll go away.

[Jersey McJones]

AL, we still enjoy a far higher standard of living, better education and healthcare, lover divorce rates, and most everythingt else compared to you dumb hick schmucks who think "growth" means something universally truthfull.

JMJ

[Jersey McJones]

I can't believe you people are so willfully simplistic as to fall for "growth." Do you even know what's measured? No?

Goofuses.

JMJ

[sage +P]

New Jersey = Armpit

That's a well-known, endlessly proven FACT. Ask anyone.

[Another Lurker]

Better education?? What was that sob story shit on the other topic from last week or so about how education in New Jersey sucks???!! Are you cracked!!?? You can't have it both ways.

"AL, we still enjoy a far higher standard of living, better education and healthcare, lover divorce rates, and most everythingt else compared to you dumb hick schmucks."

Riiiiiiight that is why the person next to me moved down here because the houses were no longer affordable in the New York metro area. Talk about sprawl!!!

Lower divorce rates? You a Christian Republican now? What does that have to do with this topic? If my marriage starts to go south we'll take a vacation to Jersey to fix it. Not.

I'll ignor the hick comment since I know you have run out of arguements and you needed another zinger. How do you know I am not a transplant myself? Oh shit, you don't. But when has ignorance stopped your fingers from typing gibberish in the past?

[Jason Ligon]

How's this for an even exchange?

I'll give JMJ $0, and he can give me the difference between per capita productivity in 1900 and that same figure yesterday.

[Jersey McJones]

Again,

An economist and a regular dude are watching two people locked in a controlled room. One person has $1,000,000 and the other guys has $.50. The economist would say, "The average wealth in that room is $500,000.25." The regular dude says, "Hey look - a rich guy and a poor guy!" Over a year the millionaire gains $500k on investments on his million. The poor man gains $.25. The economist then says, "Over the past year the average wealth in the room rose by almost 50%." The regular dude says, "Gee, I wonder when that poor guy is gonna kick that rich guy in the nuts." The point is that "growth" tells you very little. For example, the "president" was braging about job numbers recently - this while illegal immigration is through the roof. Or another example, the president was bragging about 5% growth in the last quarter - that growth, of course, included more record-breaking profits from high oil costs. The fact is that American consumer debt is 10% greater than our disposable income. That's not growth. So take your insipid "growth" and stuff it where the economists don't shine.

Fools.

JMJ

[Viking Moose]

since there is an employment effect (as theory and empirical studies indicate) with minimum wage legislation, the notion that higher wage = higher income is oversimplified. Instead of minimum wage laws, some policy makers suggest income tax credits, etc. not "direct intervention". Generally the empirical studies and economic theory suggest a negative effect of increasing minimum wage.

Greg's request for studies on minimum wage:

"The Economic Impacts of Minimum Wage Laws: A New Look at an Old Question" by Peter Linneman in: The Journal of Political Economy, Vol. 90, No. 3. (Jun., 1982), pp. 443-469.
Or:
Pashigian: Price Theory and Applications (2nd ed) page 645. 0070487782 (isbn)
or:
Wages, Inflation, and Unemployment ("Minimum wages produce a surplus of labor just as maximum rents produce a shortage of housing.")

Proponents of minimum wage laws look at Krueger's study from the mid 90s on fast food and minimum wages in new jersey: employment increased after minimum wage was increased.

"Minimum Wages and Employment" QJE (1998) by David Card and Alan Krueger.

Also :
Zadodvy (1998) in Atlanta's Fed Econ Rev: "Why Minimum Wage Hikes may not reduce employment"

This is a rebuttal to Krueger's paper:
Neumark, Wascher in AER (Vol. 90, No. 5. (Dec., 2000), pp. 1362-1396.), "The New Jersey-Pennsylvania Minimum Wage Experiment"

They found, using payroll data, elasticities of -0.21 to -0.22. Other studies showed elasticities to be -0.10 to -0.25. The direction of the coefficients are negative, and the disemployment effects are usually significant at 0.9 or 0.95.

Deere, Murphy, and Welch "Employment and the 1990-1991 minimum wage hike" AER (May 1995): 232-237.

Charles Brown, "Minimum Wage Laws: Are They Overrated?" The Journal of Economic Perspectives, Vol. 2, No. 3. (Summer, 1988), pp. 133-145.

[Bob Smith]

One of the problems I'm seeing with northeastern refugees moving south for better economic opportunities is that they're bringing liberal northeastern politics with them. That is, part of the problem NJ, MA, et al have is that voters there vote for politicians that institute the oppressive economic, regulatory, and tax policies that lead to many of them moving down to GA or FL. Unfortunately, once they're down here they continue to vote just as they did before! If enough of them move south what brings them here will disappear as they vote for what they know e.g. the same failed policies that led them to leave in the first place.

[sage +P]

As if to drive home my earlier epithet, there has been a form of bird flu found in...New Jersey.

[Jersey McJones]

Bob, they are leaving to retire, get cheap housing, start anew, etc. The big city north is where people make their fortunes, The South is where they while away the day anjoying it. So fear not, yes, of course we will take over down there. As long as you people are so stupid as to elect the sorts of bumbling asshole thieves that you do, you play right into ourt hands. Failed policies? Yeah right. That's why a home up here costs ten times what one does down in shithole Dixie.

JMJ

[Another Lurker]

""Gee, I wonder when that poor guy is gonna kick that rich guy in the nuts.""

Here is the root of the problem. You actually believe that the poor guy has a RIGHT to some of the rich guy's money. He doesn't. It may not be fair, the rich guy maybe should give some to charity, but the poor guy does not have a right to ANY of the rich guy's money unless he earns it.

That is where the line gets drawn. It's got nothing to do with statistics on growth. It is a fundamental difference on the concept of entitlement.

Yes I know statistics can be manipulated, it's why I didn't sight any on income. Numbers of folks moving to and from a city are not an average they are a static fact. Atlanta is in the top 5 cities that people are moving too. I have mixed feelings on the matter but it is what it is. There is no statistic on folks moving to Newark New Jersey. Only logs on the rate of how fast folks are leaving.

[D.A. Ridgely]

Expensive housing is a good thing?

[Jason Ligon]

"Over the past year the average wealth in the room rose by almost 50%."

This would be a true statement, and you are truely blind if you think it is not a meaningful observation.

I'm curious. What is that rich guy investing in? I mean, he's getting a real rate of return. What did he do that other people just gave him that much money?

That other guy, let's call him Mr. Buggywhip Salesman, certainly didn't see much growth, you are right. Hmm. The mind boggles. Is there no way out? Is nut kicking all we have left?

I GOT IT! Let's give the finger to everyone who received a benefit from the $1,000,000 investment, and split the total wealth in the room down the middle!

[Russ 2000]

I don't get the cops-n-Spanish joke, though.

OK, I guess I'll have to explain this one a bit, maybe it's not as obvious as I had thought.

The bulk of my relatives live in the Chicago area and the Louisville area. 90 miles south of Chicago (if it were north it would be Milwaukee) its rather rural. Same for Louisville, tho I am going more off stories from relatives on that one. Anyway, US 41 is about 15-20 miles east of I-65, used to be an OK drive before the interstate was built. (Think of the area in North By Nortwest where Jimmy Stewart was being buzzed by the airplane.) Not exactly the prettiest area, but there was at least some notable civilization along the way. But once I-65 went up, about 75% of the truck traffic left 41. Really killed the economy along that strecth of road. To make up for the lost revenue, the cops patrol 41 like it's the road to Kandahar, issuing tickets for the minorest of infractions you can think of to fill the town coffers. Of course, this only drove all but 2% of the remaining truck traffic onto I-65. US 41 is now basically one long ghost town. I happened to have a lapse of judgment and took it thinking the cops have wised up by now, but instead they've just added more laws so rather than getting a ticket for one minor infraction you get about 10 different citations now.

Anyway, visiting relatives in the area tell me that half of the Catholic masses at the church are now done in Spanish, the industrial farms around there are pretty much all Mexican laborers at this point. (They used to bus most of the workers in from the Gary area, but most of them settled near the farming areas because decent housing with zero-demand otherwise was available.) And judging from the ticket I went to fight, I wouldn't doubt it. The immigrant labor is about the only thing keeping anything in business there anymore because they are the only people working in the area except for a few lawyers, pharmacists, etc. It was unbelieveable the number of Hispanic arrestees in court that day, on the most ridiculous of drug or alcohol charges. The short period of time I spend outside of Lousiville I noticed a similar pattern.

I could understand the logic behind trying to pump up the town coffers with police-enforced fines, but that only works so long before it winds up driving the rest of the business away. But it's so ingrained in the police culture that the only people that don't move away are the ones too poor to have much other option.

I figured its the trend in depressed rural areas - jack up the policing which drives the locals away and the only people taking their place are the poorest of immigrants.

[thoreau]

Since the title of this thread is from TMBG...

A populist came up to me and said,
"I'd like to poison your mind,
With bad ideas that destroy job growth,
Though I am not unkind."
He looked at me,
I looked at something written across his scalp,
And these are the words that it faintly said,
As I tried to call for help:

There's only one thing that I know how to do well,
And I've often been told that you only can do what you know how to do well,
And that's be you, be what you're like,
Be like yourself,
And so I'm having a wonderful time
But I'd rather be stifling job growth,
Stifling job growth,
There's only one thing that I like,
And that is stifling job growth.

[MikeP]

An economist and a regular dude are watching two people locked in a controlled room.

Talk about thinking in a vacuum. You separate people from any sort of economic activity outside a room of two people and expect to gather any understanding from it?

For the record... If you actually did perform this experiment, the poorer person would walk out of the room after a year with a lot more than 75 cents. No violence would be required, and both parties would consider their conditions better off for the wealth transfer.

[ESB]

JMJ, people don't come to the south just for retirement. You must be thinking of Miami, not Atlanta.

My sister moved to New York from Virginia after she graduated. She had about ten job offers down here, but her fiance lived up north. She couldnt find a job for a year.

My own family moved here from Pennsylvania, which from the times I have visited family there seems a much bigger shithole than Virginia.

Sure its ancetdotal, but you seem to be thinking of the south circa 1950, or of only Mississippi and Alabama, not Atlanta and Charlotte.

[MikeP]

For example, the "president" was braging about job numbers recently - this while illegal immigration is through the roof.

I fail to see your point here. Surely you recognize that the fact that lots of low wage workers do not raise unemployment is an argument against minimum wage laws.

Or another example, the president was bragging about 5% growth in the last quarter - that growth, of course, included more record-breaking profits from high oil costs.

Higher oil costs come out of other things that the money could have been spent on. The only part of higher oil costs that appear on the sheets as GDP growth is raw oil dug out of American soil.

[Greg]

Viking Moose -

Wow, thanks. I will take a look.

[Thomas Paine's Goiter]

Sure its ancetdotal, but you seem to be thinking of the south circa 1950, or of only Mississippi and Alabama, not Atlanta and Charlotte.

Not even Alabama anymore. The three large cities are booming and the shore has exploded with job growth.

[Jamie Kelly]

There ARE a huge number of jobs that don't require such skill but nonetheless ARE necessary, and somebody is going to have to fill those jobs.

And what happens when people flee those jobs and get better ones? Why, assuming those jobs are still necessary, the labor scarcity will cause wages for those jobs to rise.
Markets are good like that.

[Viking Moose]

Greg - if you have JSTOR through purdue that should help matters greatly!

have fun!

cheers,

[James Anderson Merritt]

Lannychiu said, "'What is the effect of a price increase of an input into a production process.'"

I actually tried that, discussing the minimum wage here in Santa Cruz CA. What I tended to get (from ostensibly intelligent individuals) was, "wages aren't prices"! When I picked my jaw off the ground, and asked, "why aren't wages prices?", I was told, "because the wage is someone's means of livelihood; wages aren't prices because a person's dignity is involved."

I am not kidding.

The whole point was NOT TO ALLOW economic laws to be applied to the discussion of wages, because people weren't cans of beans. When I said that the law of gravity didn't care whether I pushed a can of beans or a person off a balcony -- both would fall -- I was told (with a pat on my little punkin' head) that economic laws weren't like the laws of physics. They were just tendencies, which held up fine in textbook examples, but were often negated by complex factors in "the real world." This last was from someone who makes a big deal about wanting to make decisions -- especially those about public policy -- on the basis of facts, not ideology.

I said that I understood about the complex nature of real world situations, but that still, the spirit of scientific inquiry would lead us not to dismiss the laws of economics, but instead to analyze the various situations, so we could understand how they functioned (or didn't) in each case. In particular, I asked, where were the studies of the Santa Cruz economic situation, which might show mitigating forces or factors that would be favorable to the minimum-wage argument? Of course, there was no such information. And there never will be. There didn't have to be. The minimum-wage proponents had managed to plant the seeds of doubt in the "laws of economics," which would allow them to advise voters to give unfortunate minimum-wage workers the benefit of that doubt, by passing the citywide minimum wage.

To be fair, there was some noise made about a "study" that would be funded by the city to assess the impact of the minimum wage. But its priority and funds were pulled when it initially looked like the backers couldn't get the signatures. Now that the measure is on the ballot, however, it looks like the electorate will have to rely upon their consciences or past experience, becuase there will be no hard, local data on which to base their decision when the matter comes to vote. When I realized this, I bowed out of the discussion, as it had veered into the truly irrational. I hope that voters will cast their ballots rationally in this case, but I also know that other "law," "Garbage In Garbage Out," which suggests that even those who attempt to vote rationally are handicapped in this case.

[The Real Bill]

James,

As a resident of San Francisco, I feel for you having to suffer such fools.

TRB

[Jeremy]

Who thinks all the rich earned their wealth? Lots of them inherited it, and, had they been left on their own, they wouldn't have done better than average. Most losers are losers through their own fault, but many winners owe their winnings to the hard work and talent of others. Inheritance is a form of welfare, and we should abolish it.

[Rex Rhino]

Minimum wage is a fiction. Minimum wage is like intelligent design.

When you raise minimum wage, one or more of the following happens:

1. Prices go up to match the increase in wages. This is the most likely scenario.

2. Job expectations change in order to match the higher wages. Instead of a grocery store hiring 10 baggers for 10 grocery isles, they now hire 5 baggers for 10 grocery isles. The baggers aren't earning a higher wage for the same job - they are earning a higher wage for a much more stressful and difficult job.

3. Other benifits are removed from the wage. No employee discount, insurance plans... fewer sick days.

But when it all comes down to it, minimum wage is a lie. It does not increase the amount of goods and services that a person can buy with their labor. It does not increase the standard of living at all. That is why we don't increase the minimum wage to $50.00 an hour... because it would become painfully obviouse that minimum wage doesn't work... where as normally people propose minimum wage increases that are tiny.

The only way to increase standard of living is to increase the supply of goods and services in proportion to the population. That requires investment in capital (capital being the means of production to produce goods and services).

It doesn't matter if you FEEL that THESE PEOPLE DESERVE a minimum wage increase... there is not going to be any increase in the standard of living. It just doesn't work. It is voodoo. You would be better off sacraficing a goat to raise standard of living.

[D.A. Ridgely]

Inheritance is a form of welfare, and we should abolish it.

Welfare involves taking money from some people and giving it to others. Inheritance involves permitting people who own money (or other forms of property) to give it to whomever they choose.

Property, as such, is generally conceived as a bundle of individual rights; that is, the right to use, the right to exchange, the right to prohibit others from use, etc. Now, you can argue that the right to bequeath or devise one's property as one chooses shouldn't be one of those rights or should, in any case, be limited. Indeed, the law already sets certain limits and many have argued for more. It's an interesting question but it's off topic here.

What is also interesting, however, is that wealth tends to dissipate over generations and flow to those who are best at its creation and management. The point is that if you divided all the wealth of the earth precisely equally on a per capita basis tomorrow and left everyone free to do with his share as he saw fit, within one or two generations you would probably have the same wealth distribution curve again.

Admittedly, there are a few cases of fifth or sixth generation wealth sheltered by elaborate trust funds and what not, but they are the exceptions to the rule. Even then, none of those later descendents personally control anywhere close to the vast fortunes their founding ancestors created.

Moreover, while both wealth and income distributions will probably always approach a standard distribution over time, the important thing is to create and sustain an economy and a society in which no individual's position on that curve is extrensically fixed.

[Adriana]

If the minimum wage raises the cost of doing business, and the business pass the cost along to consumers, how is it different from businesses passing the costs along to the community by having its employees fall back on charity, public or private?

There is hardly a day that we do not get solicitations by a local group (whether or not affiliated with the United Way), about families needing heat in the winter, or help with their rent, or medical or dental bills, and we are reminded that these are working people in need of help.

The amount of fund raising schemes is staggering, the latest one I heard was people donating items that would go on an online auction to help fund medical care for uninsured working families.

When I consider all the time, money, and effort that is extracted from the good nature of the rest of us, to help keep down the costs of business, I think that is grossly unfair that those business pass on the costs not just to their customers, but to the public at large.

Now, if I could walk into a restaurant and could say: I kept your kitchen staff warm in the winter, so you owe me a free dinnier, then I may be more understanding.

[D.A. Ridgely]

If the minimum wage raises the cost of doing business, and the business pass the cost along to consumers, how is it different from businesses passing the costs along to the community by having its employees fall back on charity, public or private?

The difference is simply that businesses and their customers and contributors to private charities are engaged in voluntary transactions, while minimum wage laws and the taxes required to support public assistance are both involuntary.

As I noted above, and ignoring for the moment the moral differences between a voluntary and an involuntary transfer of wealth, minimum wage laws place an undue burden on the employers (and customers / consumers) of employees whose labor is not worth the wage the employers must pay in terms of the productivity of that labor. Therefore, if society at large makes such wealth distribution a higher priority than the freedom of employers to make economically efficient decisions and the overall efficiency of the economy, then it is only fair that society at large equally bear the expense. Otherwise, those of you who favor such redistribution are in effect saying "We think this person should have a higher income, but we want you, his employer, and your customers to bear the cost rather than sharing that cost with you."

When I consider all the time, money, and effort that is extracted from the good nature of the rest of us, to help keep down the costs of business, I think that is grossly unfair that those business pass on the costs not just to their customers, but to the public at large.

In a competitive market prices are little higher than costs, more is produced at lower costs and there is more for all of us, rich and poor alike, to consume. We may not own or operate businesses, per se, but everyone in the productive economy is engaged in business of one sort or another and everyone, productive or not, is a consumer.

When I think of the time, money and effort that is extracted from us involuntarily for dubious and frequently unproductive government programs and projects, I think it is grossly unfair to the poor that there is that much less wealth left to meet legitimate charitable needs voluntarily and, more importantly, to expand the economy such that those at the bottom of the income and wealth distribution have greater opportunity to prosper.

[Jax]

Florida enacted a minimum wage constitutional amendment by referendum. It does not appear to have kept the legislature from being controlled by the Republican party. The present governor is Republican. One US Senator is a Democrat, elected before the constitutional amendment. The other is a Republican, elected at the same time as the constitutional referendum. If a state minimum wage above the Federal rate is supposed to help Democrats, it isn't working in Florida. Or, I should say, since a minimum wage constitutional amendment is usually a one-time thing--it didn't work. The Democrats can make political hay if they somehow persuade the Republicans to put a proposal on the ballot to abolish the constitutional minimum wage.

[Adriana]

D. A. Ridgely:

Tell me if it was a different commodity than labor, would you take the same attitude?

If it was the electric bill, for example? Would you hold bake sale to help defray the rent or electric bills of the local restaurant or motel? Rent can be a killer for many business, but no one expects people who do not shop there to subsidize it.

If it costs X to produce A which you use, and you pay Y

[Adriana]

I continue

If it costs X to produce A, and you pay Y

[Jason Ligon]

Adriana:

Tune ups may be necessary - but not at any arbitrarily high price.

Paying grocery baggers may be necessary, but not at any arbitrarily high price.

The problem with your labor-tune up equation is that you are assuming every job that can conceivably offered must pay to completely sustain an employee - otherwise the business is placing some sort of social burden on everyone else.

Even if you insist on thinking about the social burden as relevant, wouldn't a more accurate picture be that in the absence of the current wage, the social burden would be much, much higher? If offering a job at a low wage creates hardship, how about not offering jobs at all? Nirvana?

[Adriana]

Jason:

As with everything, the price of a a tune-up has to take into account the cost of producing it.

If a tune-up pays less than it costs the place will go out of business. There is a limit to how low you can sell something.

We have too many people who after working a full day, still have to ask for charity (be it public or private, it makes no difference).

I see this as a way to pass down costs not just to the consumers but to anyone else.

And having been the recipient of too many calls at dinnertime asking me to contribute to this or other, I have discovered a warm spot for doing it through taxes, which at least let me have dinner in peace.

And how free is a contribution to the United Way, after all the pressure you get at work, and the dirty looks from your co-workers?

The problem with private charity is that it can get obnoxious pretty fast.

[James Anderson Merritt]

Jason Ligon says (to Adriana), "The problem with your labor-tune up equation is that you are assuming every job that can conceivably offered must pay to completely sustain an employee - otherwise the business is placing some sort of social burden on everyone else."

This is yet another point I argued here in Santa Cruz: that it is unfair to require that EVERY job be a "livelihood," much less a livelihood for a breadwinner with dependents. Some jobs you do to have a few extra bucks to spend. If you want something better, you improve your skills and lobby for promotion or go elsewhere to get a better situation. That's the circumstance of an "entry-level job." The unconvincing yet disturbingly common response from the progressives was, "Fine. If one doesn't need the job to sustain oneself, then work fewer hours, but for every hour worked, earn the minimum wage." The never-conceded point was that, a person who worked an eight-hour day, should be able to at least support himself or herself in the community where employed, and that every employer had the responsibility to make that happen or go out of business.

[Jason Ligon]

Adriana:

As JAM is shocked, so am I. So, every conceivable job at which a human being could be employed for 40 hours per week must pay enough to completely clothe, feed, and house said employee and all of his/her dependents? I suppose this is true whther you live in Manhattan or in Ft. Smith, Arkansas?

The amount of time you work has NOTHING to do with the value of the service you provide with your labor. Nor does the amount you sweat during work hours. You are, in theory, getting a wage related to your production of economically useful goods or services. You are saying that any type of job that results in productivity less than the prevailing cost of living should be ILLEGAL.

Isn't that kinda, well, crazy?

With that kind of living wage demand, you will create unemployment on a large scale, you will force automation of all manual processes, you will increase the incidence of outsourcing, and you will raise prices on everyone to the extent that those things are not effective.

[anon2]

Jason,

Adriana is in favor of automation. Her understanding of economics is different from mine.

[Adriana]

What I am saying is that I am getting sick and tired of being asked to help cover the expenses of employees of businesses I have noting to do with. Places where I do not shop, nor own stock, nor draw a wage.

Can you tell me what I am getting for my aggravation? Why should I put up with it?

[Mr. F. Le Mur]

...United Way ...The problem with private charity is that it can get obnoxious pretty fast.
United Way isn't a private charity; it's largely or mostly funded by taxpayers through grants, which typically apply to given projects and are omitted from general expense accounting. FWIW, one UWA board member makes over $1.5M/year.

Isn't that amazingly condescending?
Yes, it is. Minimum wages laws are a form of state welfare, and Shem displays his superior morality by claiming that other people should be forced to assist his inferiors.

[mitch]

Adriana, it sounds like you are blaming the government and/or taxpayers because you know alot of aggressive beggars. Tell them to fuck off or something. Giving them money when they beg only encourages them to beg some more.

If there are working people in need of help, it is because they have had bad luck or made poor choices. Mr. Y is not obligated to give his property to Mr. X because Mr. X had some bad luck or made some mistakes. Businesses are no more obligated to give Mr. X some of their property than you are obligated to give money to the United Way. If minimum wage laws are used to force businesses to surrender their property to Mr. X, it is as immoral as if the United Way people came to you asking for money armed with a gun and a key to a dungeon.

[Adriana]

mitch:

If only there were aggressive beggars. I am talking about organized charities, like the United Way that has your company "suggest" that you donate a portion of your paycheck to them. And if you refuse, that may put a crimp on your own chances of promotion, as "not being a team player"... Not to mention that other organizations that you may want to belong to, be it a golf club, or a book club, sooner or later start passing the hat for a worthy cause, and if you refuse, you ruffle feathers. Not to mention the service clubs, like the Civitans, the Lions, the Rotarians, which people join for the networking they get from it.

Another factor, if you make a donation to any worthy cause, you get a tax deduction. People who do not make a donation might end up with a slight surcharge to the tax they would already pay if no one made a donation to anything. So, whether you do it voluntarily or not, it eventually comes out of your pocket, and sometimes it feels like an old sketch about his lady who was deceived by her lover, who only wanted her money.

When she finds out, she starts lading him with gifts as he leaves. Because, she says, she'd rather be known as a generous lady than a pathetic deceived woman....

In any case, when the money goes to pay the living expenses of people who work full time, they constitute a subsidy of their employers.

Let's go to the example of the tune-ups. The price of the tune-up is determined by the free market, but it has a floor: its costs. If it costs more to do a tune-up than what it pays, then the tune-up service would disappear. Same with any product that it costs more to produce than its sale price. If it does not disappear, then the money has to come from somewhere else. Does the garage overcharge its other services? Do they get themselves a governent subsidy to continue offering cheat tune-up? Do they hold bake sales to pay for the costs? Is it just a front for money laundering? Are its ownerss busy digging a tunnel to break into the bank next door?

When somebody pays for somenting less than it ocsts to produce, it is only because the rest of us end up stuck with the costs, and our only choice is to pretned that we are generous ladies, not pathetic deceived women...