I will not pay over minimum wage ever..
as long as I get good workers for cheap, why pay more.
I personally like my money, I don't wanna give it away.

Cool article.

Not everyone agrees. Lots of people actually think a minimum wage does good for people. They don't understand how economies work and they're thinking with their hearts and not their heads.

if a business can't make money on top of paying someone a wage that is below the official poverty line then they shouldn't be employing people.
minimum wage jobs are minimum wage for a reason, there are only so many way to turn on a fry-o-lator that a dollar either way per hour isn't going to provide the stimulous to "learn the skills" to flick the switch on faster.. just give a large company with nice profits even larger ones...
minimum wage has nothing to do with moving jobs off-shore. Paying people even 50c an hour STILL isn't going to be able to compete with outsourcing to indonesia..

Indeed, i think we should put a stop to the insurance of employees too, because that's how economies work better.

I recently let go of an employee (Actualy yesterday) who was making beyond minimum wage. 62k per year with incentives to be exact and he was a lazy fucker that didn't even merit minimum wage.

He had skills but his ethics were something less than desirable.

How would not providing insurance for employees help the economy?

Providing insurance isn't a requirement either. It's a benefit.

If setting a minimum wage helps so much, why not just set it at $100/hour and make everyone wealthy? Then no one would be poor.

Prevent poor people....set minimum wage at $100/hour today!

the minimum wage isn't to make people wealthy.. it's to make them not poor enough to break into my house and hock my VCR

How so?

The more you raise minimum wage, the more prices go up to compensate for it. The people at the bottom are still at the bottom. If minimum wage is $1 or $1000 per hour, the people making minimum wage will still be in the same exact situation, and be able to afford the same exact stuff.

Let's say you own a company. You employee people paying them $5/hour and you sell your product at $10. If I suddenly tell you you have to pay your people $6.00/hour what happens to the price of your product? Are you going to eat the loss or pass it on? Can anyone afford more than they could before?

You're not the only company affected. Grocery stores, gas stations, McDonalds, etc are all affected, so everyone has to raise prices. Now the companies higher up the food ladder have to raise their pay and prices, too, so their people have the same purchasing power as they did before, and now EVERYTHING costs more.

Keep raising minimum wage...it's a great way to accomplish nothing except inflation.

The decision makers may have other reasons than those based on economic efficiency.

Honestly, if you only built an economy to be as efficient as possible, you would then kill all the people who retire or cannot work and are thus unproductive.

Minimum wages exist to protect justice between the employee and employer.

ps. I'm not defending minimum wages or anything, just wanted to mention why they exist.

On one hand, the economist in me sees the point in getting rid of minumum wage. But, only if workers are paid what they are worth.

However, thats not the case. Im a hospitality major, I can get 8-10 bucks an hour, standing at the front desk (semi stressful, but cushy.) However, the maids that are doing back breaking work, cleaning up shit that no one else would touch (we had a supervisor that had to clean a room stained in blood) and they get paid 5.15. Hell, the Wendy's near me hires at 8 bucks an hour, for fry cook!

Its employers that refuse to pay what workers are worth that makes minumum wage where it is. If they could get away with paying those maids 3 bucks an hour they would. These people often have to work several jobs in order to have enough money to survive. How many of yall could survive with 4 kids at 15k a year? (Poverty line) Its a creul joke that these people often have the best work ethics, and deserve more.

On the other hand, raising the minumum wage will cause higher inflation, and unemployment. A struggling business might hire someone at 5.15, that they couldnt afford at 6 bucks. but, if the business cant pay people what they are worth, then they shouldnt hire them.

Wages aren't based on social worth. They're based on supply and demand. There are more people who can and will do the maids job than can do your job.

Should people making $15k a year, really have 4 kids? Part of having kids is being able to take care of them. If you're making $15k a year, you should know that you can barely take care of yourself, much less than 1, 2 or even 4 kids.

Amazing, and often hilarious, ignorance in this thread.

I never said that it got people off the bottom.. yes increases will mean they can buy the same shit.. the minimum wage earners will ALWAYS be on the bottom.... it's not about making them "rich or "well off" it's about not making them any worse off
whats not being taken into account is that the minimum wage HAS to be increased from time to time just to KEEP them at the same level.. there are many other factors other than the minimum wage that affect the inflation rate - and a 10% rise in the minimum wage DOES NOT mean a direct 10% rise in inflation. Of course it adds to inflation.. but NOT IN THE SAME PROPORTION.

the minimum wage has DECREASED in real terms over the past ten years... what you're calling increases aren't even STASIS.

if the minimum wage ISNT increased for 5 years, INFLATION STILL OCCURS.. it isn't either a standstill or a merry-go-round.

Why do i get the feeling i won't be hearing many people complaining about tax cuts because they are also a cause of inflation?
why is the inflationary effect of tax cuts somehow better than the inflationary effect of trying to peg the minimum wage to the poverty line?

and even if it wasn't whats so bad about an inflation rate that is in a small part affected by the poverty line?

I'm a libertarian if you haven't figured that out from my posts. And yes, I agree that the minimum wage should be abolished. What we have in the US currently is frustrating. The people who's labor is valued less than the minimum wage are reduced to either welfare, illegal activities, or dependence on private sources [i.e, family]. One part of India is a good example of the effect of getting rid of the minimum wage--in this province, there is little to no unemployment because anyone who wants a job can get one. Sure it may not pay much at first but it does give people a chance to get experience and move up.

The best form of welfare, truly, is a job.

Fine. But the problem identified by the original post was that the minimum wage may be an "artificial price" for labor. It should be markets that decide how much labor is worth. It also soaks up excess labor. Maximum employment and...as experience rises... higher wages since the employers will have to compete for workers with higher experience levels.

It all depends on a person's skill, experience, and education level. Abolishing the minimum wage actually tends to reduce inflation, increase employment, and [based on economic trends that correlate high employment with lower crime] reduce crime.

Exactly. or $5-8 a day in the Philippines. In the Philippines, you can get a college educated English speaking hard working person for less than $100 a month.

The only drawback with relocating operations overseas is that, depending on the country you're moving to, employees have lower productivity rates, communications issues, and infrastructure issues. Also, Im not sure about thailand, but in the Philippines and Latin America, there's lots of holidays and feast days that cut into productivity.

Other than that, if wages and schedules are structured right, you can probably explode your current earnings by having more hands and brains to help you at a fraction of the cost.

BTW, congrats on the move to Thailand! Good looking out!

I completely agree with you, Puremeds. Unfortunately, Big Labor and the Democratic Party in the US has made the minimum wage one of the Sacred Cows of the modern Welfare state.

There is a state in India, I forgot the name, that eliminated the minimum wage and basically ensured employment for everyone.
There is also a logical trap in some critics' thinking that eliminating the minimum wage will result in poverty--this may be true in the real short term but as experience level increases, employers start outbidding each other for the labor pool with a certain skill level.

They still make much more money than they did in Central America under a near slave like Campesino or Latifundio system.

"Laissez faire" French term that refers to a "hands off" government policy when it comes to business. Less regulations and less government interference. It has its limits but its right on when it comes to the minimum wage.

That's not true. If you increase the BOTTOM wage up, then the MIDDLE and HIGHER wages will demand to be increased as well. This is one of the classic arguments AGAINST minimum wage--its inflationary effect on the rest of the labor economy.

Frank, being a Libertarian it makes sense that you would be dead-set against the concept of socialized medicine. This is a topic that interests me because here in Australia (and Canada it seems) it appears to be quite a success and extraordinarily popular with the citizens.

Would like to hear your thoughts.

You are so FUCKING RIGHT ON. The Government CANNOT eliminate poverty, there will always be a bottom. Why not modify the system so that it promotes the right values [ie., working, showing up on time, taking care of your family, being responsible] instead of coddling people into dependence [ie., you're a victim, you're not responsible, etc].

Frank you seem to be familiar with this stuff.
So I assume you are also familiar with

- first best and second best. While the first best option is ideal in a perfect world, labor market is not perfect and thus the first best conditions don't apply.
Laissez faire wouldn't necessarily provide better efficiency in an imperfect market

- asymmetric information. Employer and employee do not have same access to information. Sometimes employee is willing to take any job and there's a chance for "exploitation". Employee isn't aware of his true value, while the employer is (=asymmetric information)

Guess my point is, employees who work somewhere near the minimum wage, are not capable of independently looking out for their own intrests, thus the regulation

What is your opinion on the government letting the children of poor people starve to death (literally) in the streets in the name of promoting "the right values"?

Joe, most of the reasons behind the high price of medical care is supply. The demand is always there and its rise can be traced as demographics change [ie., Baby Boomers going into middle age and needing geriatric care]. I don't wish to be simplistic but the supply can be boiled down to 1) supply of medical personnel and facilities and 2) pharmaceutical supply.

In order to replicate the "success" of socialized medicine within a free market forum, 2 things come to mind [although Im sure there are others that need to happen] 1) to loosen the supply of pharmaceutical products -- shorten the patent protection of drugs and medical devices, this will unleash generic products sooner 2)loosen regulations re the formation of HMO's and patients'
collectives

Bravo... There will always be winners and there will always be losers. If you took everyone's money and property away today and spread it out evenly, ten years from now the rich would be rich again and the poor would be poor again. I'm sure there would be a few exceptions but it would all work out like that again with a few people controlling the bulk of the wealth.

This is what PRIVATE charities are for. You seem to ready to embrace Big Government when you fail to realize that you have family,friends, neighbors, and charitable organizations [churches, synagogues, etc] that will step up to keep you from falling. Note that UNLIKE government assistance, privarte assistance has a short duration--thereby forcing you to pickup the "right values" [ie., look for a job, stay on the job, get an apartment, etc].

So your conclusion is: Government knows best?

Those factors you've mentioned are true. I have to concede that--anyone who's Econonomics 101 and even Philosophy [re "reality in a vacuum" analysis] have to concede those. But what you've failed to mention also is the process of "Information Creep" --ie., sure the employer has most of the information at first but unless they are acting as a cabal, information begins to seep out gradually and individuals start negotiating higher wages. Others see this and begin to demand the same.

Also there is an equilibrium in play here--if an employer wants to retain his employees since other employers are competing for this particular labor, he may "jump the trigger" in paying over the "prevailing" rate. This also spreads to other employees.

You just avoided the question.

Answer this question, if you dare:

Should the government allow the children of poor families to die of starvation or untreated medical problems to promote these values you talk about? Poor children in third world countries die every day of these very causes.

I didn't ask you anything about private charities, I asked you about the government. Just the government.

You can never assume that some private entity will help people.

Should the government allow innocent children to die or should the government intervene?

It was a simple question, really. :)

I'm trying to establish your position on how far the government should go in this "hands off" approach.

Laissez faire in labor market would probably cause very high transaction costs, thus reducing efficiency.

Negotiations, going from one job to another, need to travel elsewhere, insecure jobs .
You could go on and on.

To answer your question, no gvt doesn't necessarily know best, but who does? Would you trust a bum off the street more than the government?

I'm sure there are benefits and costs in minimum wage system, as in regulated wage systems in general. What you choose to represent, often comes down to a value question, because most if not all economists agree with the simple ECONOMIC rules mentioned here.

they'll either learn they are worth more than they make or will be happy/content with what they make. what's the problem with that? so what if they can't look out for their own interests.

their manager is their manager because he knows how to look out for his own interests - that's one of the things that separates them. there's really no way the government can be expected to train everyone to evaluate themselves like that.

my point is if you're not capable of looking out for yourself, don't expect me to help.

Ah Okay, now that you've made yourself clear. Like I posted earlier, libertarianism has limits. Out of humanitarian purposes, the government should not let children starve to death. To answer your question, the government/state should pay the money to hand over the kids to charities for private care.

There are limits to a hands off policy: government should take care of the courts, police, military, and yes the environment.

Libertarians and Communists are both fun to argue with. :)

I would work for $4 an hour if that's what it took to feed and shelter myself. And if one job at $4 an hour wasn't enough, I'd take a second job.

If you allowd people to work for $2-4 an hour, why would any employer want to pay more then that ever?

You want sweat shops? Cause that'll be the outcome. In some countries where the standard of living is lower the wage is lower, but can you live off $2-4 an hour?

You can not tell me that a human being is not worth at least min wage? If so, then the work force is not for them, they should be in institutions!

Exactly. Individual responsibility. Government should be the last resort, not the first. Almost every American inner city is strewn with relics of the failure of America's 1960's flirtation with MEGA government. Did the billions spent on the "War on Poverty" produce anything? NOPE. Did the 1990's welfare reform law actually move people out of welfare? YEP.

I believe that labor is a market, just like pork bellies. Telling employers how much they MUST pay, just puts some businesses out of business and creates unemployment. If it doesn't put a company out of business, it makes it difficult to compete with other businesses, makes the business less profitable, and inhibits growth and improvement, because monies that might have been put into building a bigger business (which can employ more people) and creating better and more salable products is diverted into paying people whose value doesn't reach the level of required pay. This simply cheats more workers further on down the road.

My ex-wife worked as a manager in a high-tech firm, and frequently had to hire underlings in at more than she was being paid. Why? Because the company needed them. And yet, why should she complain? It was by hiring these highly paid people that the company's products were more attractive than the competition's, and success in that competition put money in everyone's pocket.

Maybe less American companies going overseas. I hate to say it, but in an economy [not philosophically, not spiritually or legally speaking, just economic terms] not all humans are valued the same.

Exactly and it forces employers to go overseas.

let's say that you make $2-4 an hour working in a sweatshop and produce $20 an hour worth of stuff. if you're not happy with this situation you'd ask for a raise or look for a new job. or do the next best thing! start your own shop, pay your employees more of the $20 an hour you'd make off of them and potentially put your former boss out of business (or at least, be a real pain in his ass). in this country you can do that.

if you're not motivated or intelligent enough to do this, why should the government have to help? in any case, chances are that someone in that group would be so motivated and would do it if you don't, and they'd be the ones raising the wage "standard" for the biz.

Hahahah unlike my Maoist, Leninist, Trotskyist friends during my Berkeley days, I am the first to admit to the limits of libertarianism.

Okay, so you could work 20 hours a day and earn the princely sum of $80 a day before tax.

What does someone like that have to look forward to in life? And why wouldn't he/she instead choose a life of crime or dealing drugs just so life is a little more tolerable.

Pay people a livable wage. It's the fucking decent thing to do. It's a little sad that we look at people and evaluate their worth based on how useful they are to the rich.

That's right. And many already choose.
Would you like to have more prostitutes and drug dealers in your streets?

i assume you meant "not all humans are valued the same" here. if so i agree and i believe that the ideal "all humans are equal" is going to destroy us. survival of the fittest is gone for humanity but is still there for every other species.

:) Berkeley kids are awesome to argue with. I've been in a few near brawls while debating Communism/Marxism at Gilman St.

you're missing the point. say the grocery store pays their people minimum wage. what do you think will happen if the government forces the store to raise their wages? they'll have to raise their prices or get rid of people (grocery stores are exceptionally low margin). if you made minimum wage, you got a raise too, but it's effectively gone because the prices for the groceries you have to buy has just gone up as well.

that's inflation.

Gilman, right on! Used to watch punk shows there. Best show I saw was NOFX and Lagwagon together. Also, Anarchists are fun to argue with as well.... neo-Bakunists particularly

Sly and Quiet pointed out a very valid point...and that is that some of you sound as though you have never ran a business.

Well I speak from over 7 years experience in the fast food industry.

6 of those with the Taco Bell Corporation and/or franchises of that corporation.

I watched 2 brothers go from owning 10-20 stores to well over 150 in a matter of 2 years...they were one of the largest Taco Bell Franchise holders.

Anyway, there are many things to consider when dealing with the min. wage.

So many variables.

When you're dealing with a min. wage you're mainly dealing with the dregs of society and children.

This also creates a lack of competition between the employers.

In other words I could pay a kid min. wage he can come in do the job if he wishes to or just plain fuck around. So I fire him...what happens next? He goes down the street to McDonalds who pays him the same exact thing.

He has fast food experience...the manager will hire him. You become so desperate for workers that you end up hiring just about anyone...and rehiring those you wouldn't touch in any other industry.

I had my well paid assistant manager, adequately paid shift managers, and some rewarded regular employees. But the largest percentage of my staff which was well over 40 consisted of pawns. Foot soldiers that you could toss into the heat of the battle at min. wage or barely above.

Now if there had been no min. wage some kid who might have been fired from my store would have been hard pressed to find the McDonald's down the street to pay him the same wage.

He would be forced to meet the employers standards.

Now on the other hand, I can see where in some areas where there are more employees than companies people could be taken advantage of. Local businesses could pay ungodly wages knowing people who may not have a car or other forms of transportation would be forced to accept this.

The company I worked for worked us hard.

We based my own particular store on a 110% productivity level...this was all based on your stores income.

There were some stores out there who were running up to 150% productivity levels.

This does not mean that the employees actually worked that hard...this is what I was allocated in my budget.

For every $1.00 I spent on an employee I needed to get out of them $1.10.

This is impossible in a min. wage type situation.

This basically meant we ran short handed through much of our shifts with at times low quality workers...because once again they all can't be gems.

I was able to make it work, in fact my store was ranked #1 in overall growth. I took it from making $12-$14K a week to $20-$22K a week within 6 months.

This allowed me to lower my labor productivity and keep the staffing to somewhat respectable levels which in turn kept the customers happy and continued to increase sales.