Minimum Wage Increase (again)

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Vast overstatement. See Economist article; 30% of minimum wage workers are teenagers. That accounts for all high school students, most college freshmen and sophomores, and most students at vocational schools.

Nah. What happened when membership fell at the start of the 'Roaring Twenties'? Wages stagnated, even fell. Conditions did not improve, for anyone not in the upper or upper-middle classes (actually, I'm overstating; things were fine for those few in the skilled/trades unions. For everyone else, not so much). It took the widespread misery of the Great Depression to bring about change.

See also the surges and collapses of organized labor in the late 1800s.

And, frankly, I couldn't care less about stuff like teachers' unions; their successes do nothing to benefit the poorer workers--do nothing to benefit most workers. Un/low-skilled labor is still screwed, unable to effectively organize, and receives only those few benefits which are required by law--unless the employer is uncommonly generous (i.e., American Apparel). Yeah, trades unions have power, though less than you describe, but they certainly don't represent anything like a significant segment of the poor.

Which was part of the reason labor never made appreciable gains in the first place; their leadership got in bed with the government and employers.

Not to mention the extensive persecution of those who did not (socialists, wobblies, etc).

False binary choice; it is not an either or proposition. Hard work is usually required to leave poverty, as is luck. The two are not mutually exclusive.

 

True, and there's a complex web of factors that go into that. Changing one aspect of that web, like raising the minimum wage, will likely have little effect on the lives of those truly mired in poverty - I've actually heard arguments that it does exactly the opposite, it keeps people poor longer, by raising the false hope for a better life and delaying the steps that will actually make a difference, like getting education or changing jobs.

My basic premise is still that NO ONE should expect to be able to sustain a family on minimum wage.

 

Lower wages requires that people be more careful with their money. It may mean that some have to give up alcohol or quit smoking. It may mean that you'd have to shop smarter and be more creative with meal planning. It may mean tighter budgets. It's possiblem but harder than hell to pull it off.

 

Compared to Turkey, I can say it is very high. Here, minimum wage is about 280$/month; so it can be as low as 1$/hour, depending upon your work hours. However, living is about 40% cheaper here. So, it corresponds to approximately 1,7$/hour for US, which is one third of the original minimum wage of US. How could a family live with it in human standards? Some things must change here quickly.

 

companies dont have to let workers go or reise prices, to cover higher minimum wages, because people who get more money, spend more money. so in fact most companies would at the start earn a little less, then they would see an increase in sale, then they would have to produce more, which would either put them back in status qou or force them to hire more people.

this is of cause the positive idea of how a raise in minimum wages works.

imho minimum wages has to lie around a decent level where a family can support itself for does wages, without having to work more then the average.

 

LNT covered the main point I was going to make when he said this:

There is a little more that I would like to add to that though. I do not doubt that the few who have escaped poverty have had to work hard. In that respect, I think I can agree that working hard is a prerequisite to escaping poverty. That having been said, I don't think it's as simple as "if you work hard enough, you will succeed". As Chandos pointed out, there are a multitude of other factors that play into this, one of which is certainly good fortune. For some people, they won't succeed regardless of how hard they work.

Another thing to point out is that we will never eliminate the bottom few percent of wage earners. There will always be people who earn way less than everyone else. In raising minimum wage, you may change what the income is of the people in the bottom few percentage points, but there will still be people in the bottom few percentage points in earnings.

 

Oh, I would agree that working hard alone won't get a person out of poverty...it also requires making good decisions, and some of those are really tough...giving up drugs, smoking, alcohol, partying, fancy clothes, new cars, new computers, getting up early enough in the morning to get to work early, going to bed at night, working overtime, volunteering to take on additional work...etc. However all these things will override luck every time. There are an almost limitless number of opportunities out there, and if one works hard enough and makes good choices they will sooner or later find themselves in an opportunity to improve their position in life.

I am sorry, but if you don't believe that then you have to believe that you live in a life that is predominately out of your control, and I refuse to believe that...feel free to call me disillusioned if you like.

 

But how about all of those people who didnt have to that stuff Darkwolf? I know I didnt and still get by ok and so does actually most of the people in the western world.

I believe the opposite of you DW, I believe that we are predetermined and from what I have seen of humanity that is the case. Sure you can break out of your "predetermined spot" but that takes extraordinary people. Heck, I am as cynical as to claim to be able to point out with 90% certainity which kids will go to jail at the age of 10 already.

To break out of poverty you need to be an exceptional person, you need tons of luck and of course truckloads of hardwork. Your comment that all they need to do is lay off the smokes and booze I find highly degrading and what you are basically saying is that people have themselves to blame for being poor. I guess people have themselves to blame for being born handicapped as well ro something? You know, gods punishment and arguments of that kind.

 

I am speaking of America, and yes if you are poor in America it is the result of your choices. In China or India, I would not say this is the case. I cannot judge other industrialized nations becuse I simply do not have the expertise.

In America a pack a day smoker can pay for classes and books at a community college just by quiting. Figure cigarettes are $4.50 a pack times 365 days a year and you have $1,642.50 of wasted disposable income. Tulsa Community College charges $51.15 per credit hour, so multiply this by 3 credit hours for your average class plus $75 for books for each class and you can afford to take 7 classes every year, really about the most a full time worker can effectively handle.

I know people who don't have a credit card to their name, have to carpool to work because they can't afford a car, and complain that they are underpaid while every week spending at least $200 for one nights outing (dinner and clubbing).

In actuality they don't even have to give up smoking, there are government and private programs that will pay for poor people to get their GED and an associate degree at community colleges, and if they do well on these they can gain admission to major state universities and get financial assistance there as well.

I have to be honest...I don't know a single poor person who doesn't have some vice that impacts their life: drugs, smoking, drinking or gambling. I am sure there are some, but they are few and far between. Regardless, all have ample opportunity to work their way up to management positions in any business they work in (or they can move on to a business that promotes from within) if they really want to and are willing to make the sacrifices.

In America your choices lead to, and hold you in, your economic position...societal pressures may lead to making bad decisions, but no matter what you do for the types of people who have had a disadvantageous upbringing they will make choices that keep them poor until they choose to make the changes in themselves and their behavior that will lead to bettering themselves. There is nothing anyone can do to help them until they choose to help themselves. Unfortunately that usually doesn't happen until they hit rock bottom.

Joacqin, I am not sure if you are insulted because things are different in Sweden than they are in the US, but IMO anyone in the US that doesn't believe that they could improve their financial situation if they were willing to put out the effort and make certain sacrifices is simply blaming society for their lack of drive. I also do not believe in destiny...if I did I would blow my brains out. What is the point of life if you don't have control over your own fate?

Even using myself as an example...I could put in 20 hours of overtime a week, and volunteer for more projects and within 2 years I would be a Director making 2.5x what I am now...but it isn't worth it to me. I enjoy my family and would rather have memories of spending time with my children as they grow up rather than drive a BMW and live at the country club. When I got out of college I went to work as a bank teller, and within 3 years I was a manager. If I would have had 2 more reports working for me I would have been an Assistant Vice President. 3 years after that I was hired by another bank and would have automatically received my Vice President title in 6 months had I stayed. I made the choice to walk away from it because I didn't like the way work was consuming my life. I only work 45 to 50 hours a week now and I make a solid middle class income. That isn't to say that I have laid back and just let the paychecks roll in. I have made it through at least 10 rounds of layoffs over the last 3 or 4 years. The reason I have not been laid off is because I have learned skills that make me more valuable than most of my co-workers. Consequently over the last few years I have survived while over half of the group I worked with are now no longer working for the company. I even received merit raises during salary freezes when my co-workers were getting nothing. Trust me, if I can do this anyone in America of average intellect and full control of their facilities and extremities could. All they need is an opportunity, and that opportunity is waiting at almost any business with a help wanted sign in the window.

I am thankful that I live in a nation with such opportunity, no matter how much my government embarrasses me on occasion.

Now, someone explain to me how they believe that giving a raise from $5.15 to $7.25 is going to help people break out of the the poverty cycle. Shouldn't that be the goal anyway?

 

Was the sentence before the last a rhetorical question? Unless you spend all of the extra income on booze/tobacco/drugs or what have you (in which case, of course, you're helping other people with their jobs), you are essentially breaking the poverty cycle by simply being less impoverished. With half a brain, the extra money may mean a better diet and healthcare, easier access to education and/or a job (say by having a computer to check online, or a car to go to a job that is out of town) without the inconvenience of a second job or a 12-hour workday. You could waste the extra money, sure, but as the saying goes "If you don't want to help yourself, not even God can help you."

On a more positive note, in the long term a planning person might be able to save enough to become self-employed (say, a McDonalds worker opening a small fast food shop in his hometown). While this mostly works (afaik) in low-qualified professions, usually they are the ones in which you get a minimum wage anyway. If you're making 15 dollars per hour, why bother?

 

Its better for the local workers to have power, than to be abused by foreign corporations. I remember when Burger King and McDonalds first came to N.I. in the early 90's. They were exploiting students and paying them less than £2 per hour (and not paying them for work done after their shift ended). Still in Lisburn a city of 200,000 there is only 1 McDonalds left, and its future is in doubt.

As for min. wage - I can hardly believe some of the posts that I have read here, suggest that people forced to work on low wages deserve it! I am glad I live in a country that fights for its citizens rights.

 

Wouldn't raising wages just increase inflation and make prices go up so that everyone's actual purchasing power would stay exactly the same?

 

That, of course, presumes that you have a market on which labor, as well as capital, are perfectly mobile. There are cases, I suppose even in the US, when it's not the case.

Anyway, back to my previous point: the last time wages were increased the economy didn't feel a pinprick. If they are increased enough to account for inflation (which, compounded, would be a comparable percentage) I don't see an economic apocalypse coming out of it. Luckily, afaik it's not as if 90% of America is working on minimal wage, and imo a lot of the minimal wage jobs are service jobs hard to outsource. All in all, it's keeping an existing law (that there is a minimal wage) in touch with its original intent, that is to provide a minimal level for working US citizens. However, if it's not updated periodically, the law won't be effective at all. So imo it should either be repealed, or made sensible. If prices increase, it is only normal that so does the price of labor, which for businesses is the wage they pay. Unless, of course, people think that the already low standards imposed initially are too high and need adjustment, but I don't really agree with that. It's possible that a higher minimal wage leads to loss of some jobs, but overall I'd expect most employers to be well off enough to be able to stomach it with few problems.

@HB: It's definitely possible, but higher wages are not the only factor: their importance can be amplified or dampened. Of course, in real life the effects are seldom spectacular. However, as you probably know there's also the idea that more spending would stimulate sales, hence industry, and "jump-start" an economic surge in which companies produce more and thus balance the higher demand without a significant price increase. I think it's behind the Keynesian economics which advised the spending surge during the 1930's. Of course, Keynesian ideas have been criticized for possibly promoting inflation, but the response to the critics has been afaik satisfactory enough that the theory has enough adherents to be considered a serious school of thought in Economics. BTW, Keynes suggests public spending for the "jump-start", but I think a slightly higher minimal wage could have a slight effect in the same direction.

[ January 15, 2007, 23:45: Message edited by: The Shaman ]

 

It would be great if it was that simple. Some places simply don't offer higher paying jobs, and not everyone has the qualification either. In the US university costs and health insurance are insane. There is no way anyone on min. wage could afford such things over there. Any democrat that even suggests universal healthcare gets called a commie.

 

Curiously enough a significant advocate of universal healthcare is a certain republican governator of California.

I would agree that it's very difficult to rise yourself above poverty levels. Mostly because the enviorment is so hostile to it, but I certainly do think that it's possible. The thing is though that several of the poor aren't single and have children. While you're single you have the possibility of sacrificing all your time to promoting your social standing but if you have kids, it's practically impossible unless you're going to completely neglect your duties as a parent. Personnally I think the parental responsibilites would be significantly more important than having this one adult work, if nothing else it just might give the child a better chance to fight out of poverty.

[ January 16, 2007, 11:42: Message edited by: Morgoroth ]

 

mother Western Democracies have someform of welfare/healthcare implemented. Strange.

 

If everyone did this, and everyone got higher paying jobs, the economy would crumble. Think about it. If everyone suddenly started making around the (current) average household income of $44,000 per year, the result is that the middle class as we now know it would be eliminated. The middle class would effectively become the lower class, as now no one would have a low income. Prices would rise because of the lack of the previous lower class, which reduces the spending power of the existing (and recently improved) middle class wage earners.

As much as you promote against it, I want - and I would argue all of us need - a lot of people in these low paying jobs. They fulfill services that are necessary. To list just two examples off the top of my head of people making minimum or close to minimum wages: I WANT my company to hire a janitor to mop the floors and clean the restrooms of my workplace. I WANT the person who stocks the shelves at the grocery store to keep doing their job. And I certainly don't think the services that these people provide is worth the median $44,000 annual income.

As I said before, you cannot eliminate the bottom percentage of wage earners - they will always exist. Bumping minimum wage to improve their quality of life would help them slightly, but have a minimal impact on the economy - as previously stated, only 2.5% of all U.S. jobs make the minimum, and the people making at or near the minimum will still be lower class. Maybe I'm just not making myself clear. I'll use a corollary example:

Say the government authorized that anyone in the bottom 1% of height in the U.S. could receive growth hormone. And say that males less than 5 feet in height were in the bottom 1%. If everyone who was under 5 feet tall got growth hormone and grew to over 5 feet in height, the bottom 1% would still exist, it just wouldn't be 5 feet anymore - it would be 5 feet 1 inch instead.

To draw it back to salaries - it is mathematically impossible for everyone to earn an average salary, as that salary would cease to be the average. You are always going to have people above and below the average, as that is, afterall, how the average is reached. I think people who disagree with DW and others arguing against a minimum wage increase is because they do not share the same utopian view of "everyone can be average". The "No Child Left Behind" Act fails for the exact same reason - not everyone can be of average intellect, as Bush amply demonstrates.

As for universities, even the exorbitant cost usually works out to your benefit in the long run. Many people in the U.S. borrow tens of thousands of dollars in student loans to pay for their education. I borrowed about $20,000 - and that is a lot less than many other people I know. Given that the average college educated person earns about $1 million dollars more over the course of their career than someone who isn't college educated, you're still coming out ahead.

Health care is another matter entirely. I would have a very difficult time paying for the health care of my family if I didn't have a job that picked up a big chunk of the costs. I currently pay about $2,600 per year to insure my wife and I, and that cost will increase to about $3,500 annually once the little idiot arrives. However, if I didn't have a job that picked up most of the health care expenses, and I had to pay for it on my own, I'd be paying about $300-$400 per month per person - or in other words about $1,000 per month or $12,000 per year. Health care would be the single largest expense in my budget - even more than my current mortgage.

 

Three words: inner-city gangs. If you can argue with a straight face that people raised in that environment have much of a hope of bettering themselves, then I suppose there's no point in the discussion, as we're not going to be able to come to any meaningful agreement.

Well, that's one possibility. The other is that it might make for more equitable--I'd argue 'sane'--compensation within companies; i.e., no CEOs getting $210 million severance packages.

A thousand times no. Fast food is not necessary, to give just one example. If most minimum wage positions were eliminated, the detrimental effect on society would be minimal (I say most, not all). For the rest, an increase in compensation is hardly unwarranted.

I do--I think people should be able to afford health care. I don't think anyone deserves hundreds of millions in income, annual or otherwise. Take the $210 million severance package; that's $210 million invested in, essentially, payroll costs. In one man, in one company. I'd argue that spending most of that on other employees in the company, rather than the head honcho, would hardly be problematic. If anything, it'd likely increase the efficiency and so on of the company; give the average worker a reason to care about his job, a sense of investment, and he'll work harder. Give him minimum wage, and he'll put in minimum effort.

The problem isn't that people receive 'below average' incomes; the problem is that having an income 'below average' significantly impacts--negatively--one's well-being. If minimum wage meant people could actually afford minor luxuries such as preventative health-care, I'd shrug and worry about something else. It doesn't, so I don't.

Yes, inequality is almost certainly inevitable. Inequality on the scale in which it presently exists in America is not. Inequality in which the impoverished can't afford health care is not inevitable, nor is it unavoidable.