Minimum Wage, Maximum Intervention
Thousands of workers in five states and the District of Columbia are getting a raise today, but not because of the generosity of their employers or because they have suddenly become more productive. That relic from FDR’s New Deal, the minimum wage, increases today in the District of Columbia and the states of Illinois, New York, Oregon, Vermont, and Washington.
Twelve states (Alaska, California, Connecticut, Delaware, Hawaii, Illinois, Maine, Massachusetts, Rhode Island, Oregon, Vermont, & Washington) and the District of Columbia already had minimum wages higher than the federal minimum wage. The increase in the minimum wage in New York makes it the thirteenth state to have a minimum wage that exceeds the federal minimum of $5.15 an hour.
In addition to states, many cities have passed “living wage” laws, which set higher minimums for workers employed by city contractors.
Voters in my state of Florida recently overwhelmingly approved a constitutional amendment to increase Florida’s minimum wage to $6.15 per hour. However, rather than beginning on January 1, 2005, the amendment stipulates that the change in the minimum wage is to take place six months after the amendment’s enactment, which was on November 2, 2004. Florida also joins Oregon and Washington as the only states to index their minimum wage to inflation.
Supporters of the minimum wage act like people would still be working for the original 25 cent an hour minimum without government intervention. They fail to realize that minimum wage laws infringe upon what should be the right of an employer and an employee to make whatever wage agreement they choose. Minimum wage laws also foster the notion that everyone should be paid the same if they do the same job for the same amount of time.
The details on minimum wage laws in the states are available on the U.S. Department of Labor website. However, it has not been updated yet to reflect the new changes in the minimum wage laws in the abovementioned states. Information on the changes that take effect on January 1, 2005 is available here.
Comments (57)
I want desperately work for the original 25 cents per hour: Mr. Vence, where I may arrive, apply to whom and when, please, all is good, I love all employers, their brotherhood. I don't eat (I have noone tooth) I dont sleep (insonnia), I feel my self generous, assuring I work hard: in sum, I'm a STAKANOVIST for sale.
Published: January 1, 2005 7:03 PM
Edoardo
I think we'd understand you better in Italian.
The people who vote for this sort of legislation deserve it's effects, but the problem is that the rest of us don't.
Published: January 2, 2005 7:23 AM
Dear Horatio, you are a sympatic guy too good for gathering your toughts at 7,30 A.M. I'm not able to do so even at midday but I work hard for the 6 bucks a day promised. If the employer is getting nervous for the risk of his business I accept also to be beaten to my back: I'm a MASOCHIST. The only thing I request is to be paid AT ONCE not when the product is SOLD, sothat I can exploit for one time the employer. Happy new year to all idealists of this world.
Published: January 2, 2005 10:28 AM
I found my favorite argument ever for the minimum wage, courtesy of the blog left2right. One of their posters argued that while the minimum wage may cause some unemployment (at least he gets that), it's offset by the benefits that the workers who are now working for the higher minimum wage receive, and the unemployed workers are better off because government programs can then train them to become more productive workers!It doesn't do much good to talk about infringement on people's freedom to make labor contracts, since people who believe in the minimum wage also tend to view the labor market as inherently coercive, with employers wielding all the power and employees at their mercy. Sometimes it seems like if an idea as bad as the minimum wage just won't die, there's no hope of getting people to think logically about anything in economics.
Published: January 2, 2005 11:27 AM
and the unemployed workers are better off because government programs can then train them to become more productive workers!
Heh. That one gave me a chuckle, too. If government training was so good, wouldn't the twelve year government training program (a.k.a public schools) make any other programs unnecessary?
Published: January 3, 2005 9:46 AM
I suppose if we set minimum wage at $100/hr, then the benefits to the people still working will *really* offset the disadvantage of higher unemployment! Throw another decade of government-paid training to the unemployed, and soon they'll all be productive enough to earn minimum wage! :D If we must have minimum wage, darn it, let's make it worthwhile!
Published: January 3, 2005 1:15 PM
Minimum wage laws do not necessarially cause unemployment. As was discovered recently with gas prices going up, it was found that demand did not move at all. With the minimum wage at 5:15/hr, help wanted signs everywhere I go, and a 'stated' unemployment rate of 6%, I would say that until it can be shown that the minimum wage is creating a measureable amount of unemployment it is reasonable to have a minimum wage.
"But studies show that this isn’t the case. A 1998 EPI study looked at the impact of the most recent 1996-97 minimum-wage increase, and instead found that the low-wage labor market performed better than it had in decades. A recent study by the Fiscal Policy Institute of state minimum wages found no evidence of negative employment effects on small businesses."
Given that the effect of no minimum wage and by extension all labor wage supports, (ie gov't unemployment insurance, welfare, medicaid, food stamps, sect. 8, etc.) would be a loss of real wages for millions of people. A large segment of the bottom of the population are effected, given min. wages effect on wages just above it.
It can hardly be considered humane or even good policy, given the instability of poverty (crime/radical politics/militancy) and the lack of consumers created by such poverty, to abolish the minimum wage.
Brooks
Published: January 3, 2005 5:13 PM
Brooks,
Since the law of supply and demand does not apply to labor (which is the logical conclusion from the content of your post), why do we not raise the minimum wage to $100 per hour? After all, if the demand for labor does not fall as the price increases, there should be no practical ceiling on the price the government can force businesses to pay for labor, yes?
Published: January 3, 2005 8:02 PM
Why do we not raise the minimum wage to $100/hr? Because every successful blackmailer has a pretty good idea how much he can extort before his victim blows the whistle on the whole scam. And socialist politicians are very, very successful.
Ultimately the recipients of this extortion are also victimized, because they find that they are paid in a fiat currency which loses its value day by day.
As for Stakhanovites: these are hardly the product of a capitalist system.
Published: January 3, 2005 8:37 PM
Discussing the minimum wage with a socialist colleague of mine, his thinking ran like this:
1) Minimum wage does not cause unemployment since the jobs still have to be done regardless.
2) The 'cost' will therefore be reflected in higher prices rather than less employment
3) These higher prices will be paid by 'everyone' (since every industry will be under the same law) and so it becomes (in his words) "a form of wealth redistribution whereby lots of people pay a little extra to give those few at the bottom a decent quality of life"
I don't really know how you argue with that mindset.
Published: January 4, 2005 6:57 AM
I was having a discussion with someone about the idea that "the jobs still have to be done regardless." He was observing that the number of full service gas stations is far, far, fewer than it used to be, and that almost no one employs elevator attendants anymore, which used to be common. When I go to the grocery store these days, I use the automatic checkout line, where one clerk watches four computers that check customers out simultaneously. While companies are always using innovation to cut costs, I wonder what role the minimum wage plays in pushing them to replace jobs with automation that much more quickly.
Published: January 4, 2005 9:12 AM
Lisa,
As my post laid out, when the price goes up, demand does not 'have to' go down. It is your contention that for every rise in price there is a subsequent drop in demand. But looking at the actual numbers this is not so, gas has nearly doubled in a matter of a few years and there is no evidence for a lowering of demand. What this means is the current price for gas is not high enough to start effecting demand. What my point also was, with low unemployment and no evidence of unemployment caused by increases in the MW, that the current MW of 5.15 does not cause unemployment. Now will you tell me that I must buy less tomatoes because the price went up in Florida, where I am, due to 3 hurricanes and a early cold snap? The Law Demands it!
Brooks
Published: January 4, 2005 3:46 PM
Brooks,
Your evidence misses the least skilled people who are simply priced out of the labor market by the minimum wage. What about them? Also, you didn't answer my question. Why not raise the minimum wage to $100 per hour?
Published: January 4, 2005 4:09 PM
"Also, you didn't answer my question. Why not raise the minimum wage to $100 per hour?"
No labour advocate of any stripe will ever answer this question, except with the vacuous "well obviously there's a point that it's too much." The underlying premise there being that somehow a central wag authority is capable of determining not just the minimum but also the maximum amount labourers should be paid.
Pellinore
Published: January 4, 2005 6:56 PM
Lisa,
You have given no evidence to counter my evidence of no effect on the unemployment rate. And you never addressed my point does price 'always' have to mean a decrease in demand in every case? My point was that we found no evidence that the MW effected the unemployment rate, you could then deduce that until the MW does effect unemployment we should raise the MW until it does. Also some other objective minimum standard of living could be used instead, below effecting unemployment.
Brooks
Your evidence misses the least skilled people who are simply priced out of the labor market by the minimum wage. What about them? Also, you didn't answer my question. Why not raise the minimum wage to $100 per hour?
Published: January 5, 2005 11:31 AM
"My point was that we found no evidence that the MW effected the unemployment rate, you could then deduce that until the MW does effect unemployment we should raise the MW until it does."
See? The central wage authority is better-equipped to determine not only the minimum wage, but the maximum as well!
"Pay 'til it hurts!"
Pellinore
Published: January 5, 2005 12:27 PM
"My point was that we found no evidence that the MW effected the unemployment rate, you could then deduce that until the MW does effect unemployment we should raise the MW until it does."
See? The central wage authority is better-equipped to determine not only the minimum wage, but the maximum as well!
"Pay 'til it hurts!"
Pellinore
One, it is your contention that the reverse is not true that since someone agrees that poverty with a .25/hr wage is better then poverty without that no harm is occuring and freedom reigns. Ignoring the actual conditions of this bottom rung of humanity. Two, it is your contention that MW wage causes unemployment, if evidence shows that the MW does not cause unemployment (at current levels) what do you care what the wage is if it doesn't lead to the problem for which you have with MW which is unemployment?
Brooks
Published: January 5, 2005 3:09 PM
Brooks,
My main objection to the minimum wage is that it is a violation of people's freedom to contract as they choose. That alone is enough for me. However, a few points:
Your contention of "evidence" is flawed. The minimum wage does cause unemployment. To actually prove empirically that it has no effect on employment, you would have to hold all other variables in the economy equal, and that's not possible. If you can't hold everything else equal, all you have is two things that coincide in time- you cannot make conclusions about their relationship. If what you are saying is valid, then raising the minimum wage could also be said to be responsible for peace in the Middle East, if this should happen to occur at the same time as a minimum wage hike.
Your evidence, again, does not take into account people whose labor is valued by employers at less than minimum wage laws require employers to pay are priced out of the labor market. What about the harm to them?
If you propose to hike the minimum wage until you can see the effect on unemployment rates, you can keep raising and raising it, until suddenly you have large numbers of people unable to get jobs (most of them low skilled and many of them probably minorities). How can you justify playing social engineer with other people's livelihoods that way? Do you really think people will just want to lower the minimum wage all of the sudden because umployment goes up?
Published: January 5, 2005 6:47 PM
Lisa,
So as long as someone contracts their labor it's ok with you, .25/hr at 80hrs/week under dangerous conditions is acceptable as long as they sign on the dotted line? Slavery is acceptable as long as they sign the contract? Those debts not covered by bankruptcy law can now be covered by contract law, maybe indentured servitude, or slavery whatever is contracted for. Contract law must be the highest calling of all moral pursuits, not life or safety or well being, contract law. Disturbing.
You say that I cannot prove MW causes unemployment then how are you proving it does? You say it must because of supply and demand? But you see if the current wage is below the equilibrium point then raising the wage will not cause unemployment. Yet Austrians refuse to look empirically at anything so you would say since no measure can ever be made to show if something is below the equilibrium point, like say unemployment data, all MW rates cause unemployment. Yet I have shown logically that if you are below the eq. point you will not get unemployment. Why would you have to hold all other factors steady? All you need is unemployment data, and specifically unemployment data for MW jobs, not exactly hard to get. Also if an employer believes that he will make more money by hiring an extra person he will not care about supply and demand he cares that he can make a profit, so he hires. The worker is a commodity he 'needs'.
Your contention is that MW must cause unemployment, which leaves just two factors to consider, you say it may cause peace in the middle east, obviously your claim that MW causes unemployment might also mean it causes tooth decay but it isn't your claim.
Harm to them? You mean the owner wants to pay someone a wage which will cause their employee to live what most would consider deploreably, and you would consider the burden of a MW the harm to the employer? Why not execute the man who steals bread to feed his family or steals medicine to live while your at it?
Social engineer? Minimum wage? How you can you ethically accept that wages would be allowed to harm people in this way to protect the harm of the minor infringement on the ability contract with employees? When you don't even know if it will cause unemployment? We can look at unemployment rates to see the unemployed, they aren't etheral numbers, someone looks for a job and there are no jobs out there, hence unemployment. By raising the MW to a point creating unemployment is in direct contradiction to what I said.
With no safety nets, including MW, eventually workers will accept whatever they can get to survive and yes the average wage will continue to drop for the people at the bottom.
Brooks
Published: January 6, 2005 10:04 AM
Brooks:
There is no "Austrian" economic argument that interpolates from some graphic representation that, when the price of a specific good rises, the demand for it will decrease. Austrians recognize that changes in any of the variables in an economy will most certainly cause other changes but their appearance and magnitude is a matter of the specific instance. The tendency of the demand for a particular good to respond to price changes is spoken of by other economists as "flexibility" but Austrians recognize, generally, that this is not an inherent magnitude and conveys, at best, a picture at a particular moment.
What is true--and what you (or anyone else) can take to the bank--is that any increase in the price of a good will cause a variety of changes: first to emerge will be a tendency for less of that good to be consumed and for consumers "priced out" to seek satisfaction of the wants previously satisfied by that good by substitution of some other (or others), which will tend toward an increase in both demand and price of the substitute. If you (and you can analogize the rest of everybody as a great many of you) continue to buy a good in the same quantity after a price rise in the same quantity as before, you will simply have less to spend on all the other things you might wish to purchase. You (and the others) will, in order to continue your present consumption level of the good which has undergone the rise, will re-prioritize your preference and buying. No other (logical) explanation is even possible. As a matter of fact, if, in the face of a price rise there has been no drop-off of demand, the "signal" in such data would induce producers to (either or some combination of both) raise
prices even further or increase production.
Let's examine the actual working of a minimum wage law. First, I think we can agree that, in the main, those actually working at the minimum wage must be "worth it." By that I simply mean that, at that wage, the product or service they are paid to produce can return its costs to the businessman (including the attributed cost of his own services rendered and the cost represented by the prevailing interest rate on the market value of the business assets). When you maintain that some higher wage rate should be instituted, that it is somehow "fairer," you are saying, essentially, that at the prevailing wage (in this case, the legally-mandated minimum) and, after defraying all other costs (including the owner's wage and interest on invested capital) the owner is still making (in your view) "too much." But how much is that?
And, under what rationale of either common sense or ethics is that a sum he should feel obliged (or be obliged by law) to forego part of to enhance the workers' incomes?
If it were true that the workers were worth more than they were being paid, that fact would be at least partially apparent to other entrepreneurs in the very same or other businesses. If he were making too much by paying too little, someone prepared to be satisfied with slightly less--a "fairer" (in your view) return--would simply pay him his price for the outfit , make the wage adjustment, and roll merrily along. Or the other fellow would open up a competitive enterprise and hire away his entire labor foorce with the enhanced wage. Or--he'd do exactly the same thing but in another business. It's nonsense.
Why don't you demand to pay $3 a gallon for gasoline? Or--when you buy gas for $1.75 per gallon, why don't you tip the attendant the other $1.25; when you bought 20 gallons, that would put another $25 in that worker's pocket--what could be fairer? But the reason you don't pay that much is because you don't have to--competition in the business sees to it that you need only pay about a certain level, give or take a few cents. The same is true of labor. The reason an employer need only pay a certain wage is that that is what's known as the "prevailing wage''--the level at which he can buy the performances required and at which most of the qualified performers can find work--whatever the level. And that level is always determined not by the employer but by the interaction of the buying pulic--the consumers--with ALL providers (business owners, wholesalers, producers, and labor).
The business owner is the "guy in the middle." If he pays too little (for anything), it'll be "bought away" from him by others keener than he for profit; if he pays too much, he loses money and eventually goes broke.
The worker's share of the consumers' expenditure is determined primarily by the competition--the existence of other workers of the same essential abilities. What can be seen is that the minimum wage law is not intended to effect the business owner negatively. Rather, it is a law directed directly against all those workers willing to work for less than a certain amount; the business owner, being identifiable and generally less mobile, is simply chosen as the unwilling tool of state enforcement of its law.
Minimum wage laws are a form of support for the wages of those at somewhat higher levels. Agitation for such laws (and their increase) chiefly arises from these groups (traditionally, organized labor). These workers seek precisely to eliminate (by attrition due to increaased unemployment of those at the bottom) competition from below for their jobs
(in the same way that Red State farmers demand that their representatives vote for the food stamp programs and humanitarian foreign food contributions that enhnce the prices they can get for their crops).
One of the strongest and irrepressible tendencies of all people (everywhere but most demonstrably so in such highly-developed countries as the US) is to "do better." Retarded only by inertia or personal insufficiencies, most are always on the lookout for a sitution in which they'll do better than their present one. Except for a rather narrow "margin of error" (both by employers and workers), at any given instant most are receiving pretty much exactly what they are worth as determined by the consuming public.
Published: January 6, 2005 3:27 PM
Gene,
Let me try and give you an example of why the rise in the price of a good will not always lead to a decrease in its consumption. If you own a business and you need 5 workers to run that business effectively you will higher those 5 workers at whatever the going rate is for that industry, and if its a MW industry you will pay MW. If there were no MW you would still higher 5 workers, unless the MW were high enough that attempting to squeeze out the work from 4 workers is more economical for your business. There is no evidence that MW has been causing these problems in hiring in the MW jobs, in fact considering the continous 'for hire' signs I keep seeing I would say the market is over ready with jobs. Even though your thesis demands that they should be going down. As for alternatives, how can someone pick an alternative to a job? Private charity, public welfare, support from family, buring through savings, etc. clearly there aren't really alternative commodities to jobs eventually the person must return to the workforce.
Next you assert that I am claiming that the owner is making 'too much' and must give back. When clearly from my words the issue is that the workers are making too little a very different position, one might be called a maximum wage (because of the belief wealth is evil, which I disagree with for many reasons), the other a minimum wage which is where the worker is guaranteed a minimum wage in which to live off of. I clearly laid a ethical point about stealing bread to feed your family, or medicine to live or whatever. I would consider it ethically wrong to allow your children to die because you cannot afford bread. Under the same ethics I would consider it wrong to not pay people a minimum standard by which they can live by, particularly when the ability to pay does not effect unemployment.
Your next point is exactly my point, why don't I pay 3/gallon for gas instead 1.75/gallon so that he worker gets the extra money, because I don't have to. If an employer didn't have to they would pay as little for employees as they could just as they pay as little as they can for gas on the market. Why wouldn't the same rules apply? Why wouldn't with all wage supports removed, welfare to MW to unemployment insurance, the absolute necessity of jobs for people to live create a situation where people accept lower and lower wages at the bottom rung? At what point is it ethically problematic for you to have someone living near the absolute bottom of poverty to be guaranteed a wage and make that law morally necessary? Is there no bottom? If people were dying but just not dying enough would there be a limit or just let the market decide their fate?
Jobs may as well be considered as water, if the price for water were to continually rise the poor would continually pay. Because to not would mean death, similar with the job market. Someone with a limited commodity of absolute need knows what they own, and knows the person will settle for what they will offer them no matter the price. The same with jobs except in the reverse.
Again you say the losers are those workers willing to work for even less then MW, yet without any evidence for a job shortage, or effect on unemployment, that assertion cannot be made. As far as we know there is a surplus of jobs, meaning the market is not adjusting to the demand, surprise, surprise, because they always believe they can get less money for labor.
Yes I would agree that Labor is behind MW increases, but your contention that their motive is to cause unemployment to eliminate competition does not even make much sense. How would this do anything but increase the states burden for the unemployed? Labor interests are both selfish and selfless, they first want they bottom wages raised so they can argue for higher wages themselves. Under the arguement, the MW is 12/hour and I only make 15/hour, not right! Also many actually believe it's not right to have someone working for 5.15/hour with no benefits in this country.
Lastly your point is they are getting what they are worth, if you removed all supports there is no evidence that eventually the lowest workers would continually fall. As history has shown repeatedly, most owners when allowed to will pay just shy of subsistence for the most hours they can get.
Brooks
Published: January 6, 2005 8:03 PM
"As history has shown repeatedly, most owners when allowed to will pay just shy of subsistence for the most hours they can get".
Legally, employers only have to pay the government mandated minimum wage. If your generalization is correct, why does anyone, anywhere, make one cent more than the federal minimum wage? And again, you never answered my original question. What about the people who are simply priced out of the labor market by the minimum wage (since, as can be shown by studies, the minimum wage hits low-skilled minorities hardest)? These people are not picked up in your vaunted studies of unemployment, which do not count those who have given up looking for work.
Published: January 6, 2005 10:30 PM
Lisa,
Brooks==As history has shown repeatedly, most owners when allowed to will pay just shy of subsistence for the most hours they can get".
"Legally, employers only have to pay the government mandated minimum wage. If your generalization is correct, why does anyone, anywhere, make one cent more than the federal minimum wage?
Because wage for the majority of workers is based on the market above the MW. The MW supports MW workers and those just above. Others are skilled rarer workers whose demand is greater. In other words they can actually demand a better wage. But most MW and just above MW jobs are unskilled, a dime a dozen, if the MW was dropped their wage would start to fall. As jobs are an absolute need, people would accept less and less. (Especially with all other supports removed.)
"And again, you never answered my original question. What about the people who are simply priced out of the labor market by the minimum wage (since, as can be shown by studies, the minimum wage hits low-skilled minorities hardest)?
My point was that evidence does not show that people are negatively effected by the MW with unemployment.
"These people are not picked up in your vaunted studies of unemployment, which do not count those who have given up looking for work.
You never answered my questions why can't people sign contracts for slavery or indentured servitude? Is there any level of wage at which it is ethically wrong to allow? If people stopped looking they are unemployed by choice.
Brooks
Published: January 7, 2005 10:13 AM
"You never answered my questions why can't people sign contracts for slavery or indentured servitude? Is there any level of wage at which it is ethically wrong to allow? If people stopped looking they are unemployed by choice." -- Brooks ...
If you sign a contract, it's obviously not "slavery," now, is it?
Published: January 7, 2005 1:04 PM
See, see? You get people who have absolutely no idea what's wrong with the minimum wage! Throw in a few fallacious ideas about the economy in general and government's place in it, and trying to show the problem with the minimum wage becomes an impossible, no-win argument. It's easy to become cynical about our chances for freedom in our current environment. Too many people don't really want freedom--it requires personal responsibility.
Look, you take something that sells for $5 and suddenly the government says you have to pay $7 for it now, even though it hasn't changed in any way. Where does the extra $2 come from? Trace those $2 back and then you can see the full effect of a minimum wage increase. The economy is complex enough that the results of the increase may not be obvious, but just because you can't see it doesn't mean it isn't having a negative impact.
Published: January 7, 2005 2:37 PM
Brooks:
Whether you recognize it or not (I don't know whether your arguments are made "in good faith" or not.), you are, in common parlance, "talking out of both sides of your mouth."
The matter which you (whether knowingly or not) ignore in order to reach erroneous conclusions is the role of competition in economic affairs. By "competition," I do not refer to legal requirements of any sort but merely to the unceasing effort by all to do the best they can in all conscious activity. The same volition underlies the behavior of employees, employers, and consumers; the outcome, insofar as economic matters is concerned, is the structure of market prices and the rates of wages, interest, and wages.
For any employer not in a monopolistic position (i.e., by being the sole producer of a product without which the consumer cannot do and for which there is no substitute OR by being the only source of employment for the workers whose wages are the subject of our consideration), the wages paid to employees are not, except within narrowly-defined limits, a matter subject to his discretion (nor to such psychological aspects of that discretion as whimsicality, avarice, malice, "fairness," or even generosity). As I pointed out in my earlier post, the upper bound is fixed, not by the employer, but by the combination of the consuming public and competitive firms. At a certain level, he will "go broke"; but even if he does not pay so much as to fail, should he pay so much as to make less than "normal" for his own efforts (managerial wage), as normal interest on invested assets, and as "normal" profit in that industry, he will lose his business either by losing sales to lower-wage-paying competitors or his outfit being bought by an astute competitor or upstart (at the price he, himself, has established, as is customary--and in any case virtually obligatory in a market economy--on the basis of its rate of profit (AKA "return to the bottom line" or ROI).
But the employer has no more freedom to exercise arbitrariness at the other end; he cannot lower wages just because no law prevents him from doing so. The very same forces (the actions of consumers and competitors) operate to assure that this is so.
By and large (and despite other factors which are not only not under consideration here but are by and large peripheral and unimportant determinants), workers, like everyone else, seek to do better and will, other things being equal, choose higher-paying situations in preference to lower; if there are higher-paying opportunities for the performances they are capable of rendering, that's where they will go. And, if in the course of their employment at a given "low" wage, they become capable of performance at a higher level of pay, they will receive a raise in their rate--or go elsewhere. To maintain otherwise is to insist that businessmen are NOT interested in making and increasing profit; every underpaid worker represents a source of potential profit to any businessman with the acumen to perceive that situation. Essentially, you are stuck here with an argument that the low level of certain wages and their recipients is due to a general stupidity and ignorance of their markets on the part of all manners of employers; this would be true even were one to subscribe to Marx' theory that the capitalists' profits are based on arrogating to themselves some portion, the "surplus value," of what the worker has produced or "earned" in the production process.
I have been long (and, perhaps, tedious and repetitious of my previous) in setting forth these points because they are essential to understanding just why none of the things you maintain can possibly be true. IF THE MINIMUM WAGE DID NOT CREATE UNEMPLOYMENT, THERE WOULD BE NO REASON WHATEVER TO HAVE SUCH A LAW AND ITS PROPONENTS WOULD CEASE TO SUPPORT IT--WOULD, IN FACT, AGITATE FOR THE ESTABLISHMENT OF OF A MINIMUM AT SOME HIGHER LEVEL WHERE ITS EFFECT IN DENYING EMPLOYMENT TO SOME WOULD AGAIN BE OBSERVABLY EFFECTIVE. Think carefully about that, Brooks. Consider a market economy for a moment where there were no laws whatever regarding wages and where employers were free to exercise nothing but their particular preferences in hiring (including preferring paying less instead of more for similar performances). In such a market, everyone who wanted a job and was willing to take what some employer was willing to pay would have a job. The various wage levels are unimportant but, since wages are generally priced in some relatively rigid relationship to the value of the service rendered to the employer (and, ultimately, the consumer), they range down to some specific point at which everyone (who wants to be) is employed. Now, let's put a number on that lowest wage. It doesn't make any difference what that figure is for our illustration, so let's call it $1 per hour. The lowest-paid workers make that wage and the employer has no reason to consider raising it (whether because he can't
or won't is immaterial). Remember, the market has fixed that lowest wage rate (as all other rates) and everyone's employed. All employers are in the position that, if they could add more workers at $1 an hour, they'd make a bit more money; but they cannot obtain more because everyone who will work for $1 an hour is doing so. In that market, an employer proposing to lower some workers' wage to 99 cents must lose a worker (who can go anywhere and get the $1 job). What would be the effect of a law mandating a minimum of 50 cents an hour. That's right--nothing! And you can increase that to 60, 75, and more cents--right up to and equaling the prevailing lowest wage rate--and the effect will still be the same--nothing! In fact, the rate can have no effect on any aspect of the market until it reaches that point (at least $1.01) where the employer has no choice but to grant a raise out of some "too much" that he's making--or to let that employee go (because his contribution is no longer "worth it"). But we already know that he can't be making "too much"--competition (the state of the market) has seen to that; he cannot raise prices willy-nilly--he will lose by the consumers' tendency to buy less than before (and, if that tedency were not operative at all times, ceteris paribus, he would have ALREADY--even before the new wage law--increased his price to that point just short of where it no longer "paid."). can't you see that, Brooks? The ONLY and ENTIRE reason for the advocacy of a minimum wage law is to CAUSE UNEMPLOYMENT and the only reason to clamor for an increase in such rate is that, for such advocates, the CURRENT RATE OF UNEMPLOYMENT IS UNSATISFACTORILY LOW, i.e., there is too great a labor force interfering--by their tendency toward improvement and upward mobility--with the competitive positions of those advocates. No other development than reduction of the total workforce has the power to ensure stability of their incomes and their enhncement in the near future. All those claims about "slave wages," "mere subsistence," etc. are claptrap and garbage. The very same advocates are routinely in favor, also, of all other measures which will effectively reduce cometition for their own positions (and thereby increase chances for enhancement of those wages in the future). These measures are dressed up in many disguises; but if your eyes are neither blinded, blindered, nor distracted by sleight-of-hand (in which the hand is quicker than those eyes), you'll see them for what they are.
Include here welfare "entitlements" (even when time-limited); various "pro-labor" legislation by means of which the costs of work-force maintenance are increased--to forestall hiring at lower levels; "student loans," (by means of which great numbers are, at public subsidy, kept out of the workforce for some length of time); agitation for measures of all other sorts than strictly wages by means of which new hiring--and firing-- is rendered difficult and potentially distasteful to employers; double taxation for social-security recipients who choose to work or operate businesses beyond retirement (even after you've worked 45 or more years and contributed, you still have to pay--in addition to income taxes--14.2% of your gross income to "finance your retirement" except for a small exempt amount. You can expect the support of the same folks for mandatory extension of paid vacation, overtime wage rates, benefits, etc. Though their intention may seem benign, the actual effect of all these measure is to make employing new people as daunting as possible to an (especilly small) employer and keeping such employers from "taking chances" on new hires (and keeping the already-employed thus in better competitive position). Legislated unemployment funds (both those financed by mandatory wage--including employer--contributions as well as those tax-funded) have additional effects in the same direction.
"Fairness" and "decency" (arguments often made, though I did not impute them to you personally except as you may entertain them in the manner of others making the same general economic arguments)) have nothing whatever to do with the matter. What is fair about making it illegal for someone to seek employment (and for a willing employer to give it to him) at some level where he can find work; it is the natural course of the great majority of all employees that they move UP in both their ability to perform jobs and earn income as their experience lengthens. People differ in their requirements in such widely disparate ways that it's downright ludicrous to apply a one-size-fits-all criterion to their remuneration. One guy's married and got kids to support, another's single and lives in his parents' home. One needs only to cross the street to work, another must have a car and travel 50 miles round trip. The list goes on.
Don't bother to reply: it doesn't count. To counteract the wealth of ignorance displayed in your arguments would take far more than the already-lengthy time and space I've devoted. In fact, the very best antidote is the reading of HUMAN ACTION by von Mises, the popularization of which is the purpose of this site. It's only 900 pages or so; a bright guy like you should't need more than a month or two to get through it and another 5-10 years to comprehend it sufficiently to discuss such matters knowledgeably. I know this simply because, as a grown man with a family, I did just that--33 years ago. And, up to that time, I'd have sounded just like you do now,
Published: January 8, 2005 10:49 AM
==Look, you take something that sells for $5 and suddenly the government says you have to pay $7 for it now, even though it hasn't changed in any way. Where does the extra $2 come from? Trace those $2 back and then you can see the full effect of a minimum wage increase. The economy is complex enough that the results of the increase may not be obvious, but just because you can't see it doesn't mean it isn't having a negative impact.
Again my question to you is there a low point in wages and conditions that you feel have a negative impact? Is there a bottom? Slavery, indentured servitude, 80hrs/week at .25/hour? Where is it? Is there one?
Brooks
Published: January 9, 2005 10:01 AM
Gene,
It is really the most amazing thing, I make arguements and people refuse to read them or respond to my points and questions. I do not know if you guys don't see them, don't want to see them, or what.
You boldly claim that the intent of supporters of the min. wage is to cause unemployment, you apparently know their motives. Yet you provide zero evidence. You actually believe, by the bold type and the fact that you repeated twice, that they want unemployment. To what end I cannot fathom. Trying to glean from your post you say that the Unemployment Labor activists are avoiding competition by reducing the labor pool with a min. wage high enough to cause unemployment. Which in your view stabilizes their income and secures their future? How does a $25/hour UAW worker, teacher, or dock worker benefit by having the min. wage at $7.15/hour which causes unemployment, in your opinion, rather then no min. wage? Does he really think that someone at $1/hour with no benefits at whatever hours the boss wants is so upwardly mobile that his job is threatened? And his job more threatened then by the $7.15/hour with a 40hour/week worker? Do you think that the subsistance worker's eye is really on his job? Doesn't even make sense.
"Too much", you mean profit for the employer? It is your contention that all min. wage employers are on the cusp of failure and that pure competition has created such a situation that he cannot raise his wage because the market has said the price of tomatoes is X and any more and you will fail? It seems you are saying that competition has driven all business to the same costs or else. I don't think there is much evidence for that except for the most perfect of competitive environments, farm prices, commodities prices, etc. You state he will either go under because he will have to raise prices or he will fire a worker, but this is in such a theoretical and text book scenario as to be laughable. Most businesses are not running that tight to the belt, most established ones are running comfortable margins, many offer different wages even in the same industry. Also when a min. wage is in effect all business must abide by it so that the issue of competition is not in play if all have to pay.
Again I ask you, and I ask that someone finally answer, is their a wage or condition of employment that you cannot ethically stand by and allow? Is, one more time, slavery, indentured servitude, or subsistance wages always acceptable to you or are there conditions in which you would have to step in?
"Don't bother to reply: it doesn't count. To counteract the wealth of ignorance displayed in your arguments would take far more than the already-lengthy time and space I've devoted. In fact, the very best antidote is the reading of HUMAN ACTION by von Mises, the popularization of which is the purpose of this site. It's only 900 pages or so; a bright guy like you should't need more than a month or two to get through it and another 5-10 years to comprehend it sufficiently to discuss such matters knowledgeably. I know this simply because, as a grown man with a family, I did just that--33 years ago. And, up to that time, I'd have sounded just like you do now,"
Such arrogance seems to come from the Austrians, and a complete refusal to address point by point my arguements. Just falling on the same tired points by the ancients. No one, still has given me a reason why unemployment 'must' occur with a min. wage. Because an employer and employee would agree on a lower wage without the min. wage does not mean that the job would go away with a min. wage. If the employer needs a worker to profit, he will higher at or above min. wage unless it prevents profit, then he won't offer a job. If the worker has no job and no welfare supports he will take any job he can at any wage he can. This will always be the case eventually for all those without jobs and other supports. If the current supply of workers is less then the demand for workers, then the min. wage can be raised until they are equal at which point unemployment will be caused by the min. wage. (Which I do not advocate, mild recessions can lead to a shift in the graph. And a min. standard of existence is what we should be after, not the maximum wage that the state can impose without unemployment.)
brooks
PS If Austrians can't argue with someone who is actually looking to understand their arguements, except with such slander as 'wealth of ignorance' or read Mises, how will you convince those who aren't per say looking with an open mind to understand your views?
Published: January 9, 2005 8:04 PM
Dear Brooks,
Perhaps if you want people to respond to your questions, arguments, and concerns, you could be concise, and summarize them in a few points (e.g., 1, 2, 3).
As it seems like the issue here is why minimum wages cause unemployment and why employers would ever pay their employees more than subsistinence, I would suggest some notes I posted (from the Mises University) on the topic:
After those brief notes (which can probably be read in a few minutes), I would suggest (in the following order)
I hope that these suggestions are specific enough to be of use to you.
Published: January 9, 2005 8:59 PM
Brooks:
It is my own view that answering your individual arguments is not productive--for either of us. As a matter of fact, even though I would agree that the recommendations made by Mr. Heimrich are each, considered individually, liable to be excellent treatments of the individual matters in question, my very general (but well-considered and long held) opinion is that they will not prove conclusive to you. Regardless of whether you were a mercenary propagandist for the policies you advocate or a perfectly honest expositor, each of the pieces cited--or ANY of the specific rebuttals to your position that I (or Mr. Heimrich or others) might offer would lead merely to more questions. That's neither your fault nor mine or theirs. It's the nature of economic science that it cannot be compartmentalized, that is, subdivided into orderly topics which may be studied independently of one another. And, the achievement of recognizing and properly addressing this nonspecificity is the singular achievement of no one else--not even preceding Austrians (nor many succeeding)--than Ludwig von Mises. In my own view, HUMAN ACTION is the single most important work of any era or in any language; in potential
benefit to mankind, it far surpasses anything I can think of in that same context, and I do not exempt the greatest works, whether of science, philosophy, art, etc., in making that comparison. If what you wish is to engage in argument, that choice is yours and beyond criticism. But if what you want to do is to understand the matters about which you express such interest, there is no other choice which will convey that understanding than HUMAN ACTION--not Rothbard, nor Hayek, nor Hazlitt, Bastiat, et al,--nor even any single one of Mises' many shorter works--excellent as all those authors and works might be.
One last point I should state about economic science (and here I would claim validity only for the Austrian school)-- though you might find it difficult to accept merely on my own representation.
Economic science is not "normative"; it does not differentiate between "good" and "bad" insofar as economic measures are concerned; as a science, it is not called on to make such pronouncements. What it (like all other sciences) can do is to accurately describe the relationship we know as "cause and effect" in the matters under its consideration and, on that basis, make absolutely certain predictions as to the effects to be expected from various economic measures. Insofar as the formation of economic policy is concerned, such science cannot make any value judgement whatever except one: to predict, with absolute certainty, whether a policy recommended or under consideration will accomplish the goal(s) sought by those recommending the policy and without causing effects worse (in the judgement of those recommending the policy) than those they sought to ameliorate.
It is precisely with this purpose and capability in mind that any Austrian economist recommends against minimum wage laws (and, indeed, against many another legislated solution to perceived economic problems): if the honest goal is to improve the economic condition of all those at the lower end of the employment (wage) spectrum, the passage of mandatory minimums cannot accomplish that goal. At best, it can assure a slightly higher wage for some in the lower bracket but only by
forcibly preventing some from securing jobs; in so doing; furthermore, it should be recognized that such policy has an even greater cost certain but unquantifiable: the higher prices paid by everybody for all goods and services on account of the foregone productivity of those forcibly restrained from production. All that I (and the other Austrians) can tell you is that, if you actually want what you say you want--a better deal for all at the lower end--we're right there with you, both as economists who know it's correct from an economic view and as people who know it's "good" from the viewpoint of such social and humanitarian considerations as equity, sympathy, and the greatest possible abundance for all of those things (both material and spiritual) upon which human
happiness and fulfillment depend.
Published: January 10, 2005 8:27 AM
Again my question to you is there a low point in wages and conditions that you feel have a negative impact? Is there a bottom? Slavery, indentured servitude, 80hrs/week at .25/hour? Where is it? Is there one?
You don't need Austrian economics to answer this question--even classical economics tells us that the economy is always seeking an equilibrium, and that includes wages, as well. There is no "absolute" bottom, no absolute amount that matters, since what really matters is the relative wage to prices ratio, i.e., how much the worker can buy with his wages. $5.15 per hour is a meaningless amount without considering how much the price of bread and rent and other such things are.
However, since economic factors are always changing, this equilibrium is never actually reached. Your assumption would seem to be that you want to pay a "fair" wage, turning this into a moral issue instead of an economic issue. Morally, though, what's fair is what employer and employee agree upon, and not how much that wage can buy. If they can't agree, then they should be free to seek others who they can agree with. What's morally wrong with our economy is the government intervention that affects the ability of people to seek or create new jobs and businesses, not just minimum wage laws, but protective tariffs, licensing, union exclusions, safety and pollution regs, etc., that give some companies advantages over other companies, and reduce the competition to businesses. Take care of that interventionism, and employees will have the "level playing field" that they deserve when it comes to seeking desirable wages. Adding another intervention to counter previous interventions isn't solving the problem, but compounding the problem.
To turn back to the economics of the minimum wage, it's logically simple, although the details are complicated. By requiring people to pay more to employees without a corresponding increase in productivity by the employee, you have artificially created lower productivity. They have less they can spend elsewhere, less means to purchase other goods and services, which means less demand, not because people want to purchase less, but because they can no longer afford to purchase the same amount as before. The result is inevitably the loss of jobs somewhere in the economy. Exactly where in the economy the jobs are lost depends upon the specific decisions that businesses and consumers make to deal with their lower purchasing power, where they decide to cut back on their purchases and expenses, and thus is difficult to predict. However, if there are jobs to be lost, the most likely people to lose them will be the most marginal employees, those who are making the least amount of money, the minimum wage workers. Logical, no?
The fact that most workers make more than the minimum wage simply mitigates the degree of harm that a minimum wage increase causes, not that there has been no harm caused. If the minimum wage were raised to $25, $50, or $100 per hour, the results of the increase would be unavoidably obvious, and not lost in the complexities of the economy.
Hope that helps.
Published: January 10, 2005 10:58 AM
David, thank you for the quick articles I will read them shortly and respond when able. I appreciate the time taken in accumulating them.
Gene, thank you for your genuine recommendation of Human Action, I will take it as an important read.
Michael and all, I'm starting to see why you, and Austrians, see the min. wage as problematic. You see the worker and boss as equals in an exchange of goods, and you see min. wage laws as causing more 'actual harm' then good because of the intervention. I would like to address these two issues logically.
First, the boss and worker are exchanging a good which is not an absolute necessity for one but an absolute necessity for the other. If people don't have work, (charity, welfare, or savings), they will eventually lose everything and live on the streets at the local soup kitchen, agreed? Now if the business owner has his price too low and loses one extra worker out of 20 because of that, he only loses the productivity he hoped to achieve from that one extra investment of labor. Now the laborer is one of a thousand or so that the owner can get to do his work, he can get someone else relatively easily at any time. He knows this, the worker knows this, what happens to the lowest skilled wage earner is that he will lower is acceptable wage very very low in order to live. Put it this way as long as there is even a modest amount of people looking for work at the bottom, and less then enough jobs available the prices/wages will continue to drop. Is there a bottom? Sure but what is it? It will always be very low, and only because of the nature of an absolute need for money in a market of surplus workers. So you see the worker and boss are not equals in a trade of commodity like a consumer buying say apples, etc.
Second, the point I see made is that the actual solution, min. wage and other interventions, are worse then the problem. One assumption is that all businesses are operating at the maximal efficiency and that any added costs will cause unemployment. This is not based on reality, businesses first run with a profit, a sizeable enough profit to make it worth the owners to have the business. (Except in the beginning, when the business is starting, but that aside, he would be runnning debts either with a min. wage or not.) So an increased min. wage would likely come from profit, bad yes, worse then the potential harm to the worker I would say no. Also labor costs are just one cost of many for a business owners operating costs, not the totality of where his margin comes from, unlike his product. If you raise all businesses operating costs with a min. wage, no one will have an advantage over another because everyone's costs go up together. Also there are alternatives to the min. wage which would not effect the min. wage businesses direcly, such as the Earned Income Credit. (Which pretty much adds a min. wage at tax time.)
Now you do not address the harm to the worker, as no one, not one person hear has said they would have a problem with slavery (as long as you sign up voluntarially), with indentured servitude, or with working conditions considered by most to be deplorable, unsafe, or 80 hours week, or 1/day, etc. You look at these conditions on humanity, and the 'intervention' of a min. wage or EIC or whatever and say the intervention is worse. I see the conditions that do arise from an unfettered labor market on the bottom, and the abuse, and see conditions as far worse then the solution and morally intolerable.
brooks
Published: January 11, 2005 8:57 PM
Brooks:
The questions you ask are easy to answer but cannot forestall other questions from rising.
An example is that in which you consider the lowest wage worker nd ask whether there's a bottom. The phrasing of the question suggests that you hold two opinions, both of which are faulty.
The first is that, at some low wage, a worker will be "forced" to accept whatever the prospective employer cares to offer. While it is true that, at any given time, any particular employer might be somewhat indifferent to the addition of more hands, such situation simply cannot be general: it violates the definitional status of the employer as "businessman"--i.e., one anxious to make profits. Regardless of the specific (and temporary) indifference of any particular employer, the condition cannot persist as a generality: under all conditions, there are profits to be made by adjusting production more closely to consumer preferences than is the prevailing state: this is the specific function of the entrepreneur--who, in any case is not (except at the risk of his capital and position) an arbitrary tyrant but a man fully subject to consumer preference (for the best stuff they can get at the best prics they can find), whether determined thoughtfully or capriciously. (NOTE ALSO that, until such condition is met--that the consumers have all they want of everything they might want, whether good or service, i.e., until everyone is completely satisfied--there are jobs to be had
at wages which will at least satisfy the requirement summed up in the phrase "the bare minimum." There are certainly people whose efforts are incapable--not "worth" what someone else might need pay to support the requirements of their lives. They are NOT workers in that sense; they are submarginal insofar as the value of their labor is concerned, similar to a piece of land on which nothing may be grown in excess of the cost of the inputs necessary to gain the crop. They may need permanent support provided by others; but the more usual case is that their condition is temporary and accounted for by youth, elderliness, inappropriateness of location, or sudden change in climatic or employment conditions; some of these conditions are meliorable, others less so. None are the fault of or under control of the employer (except to the degree that, at some lowered wage, he might see opportunity in the training of unqualified but "promising" men, particularly the young or those capable of acquiring skills more in line with market requirements. Marginality among people is relatively rare, though millions are trapped at that level, often by the marginality of the land itself but most often by conflict which disrupts all efforts at production.
Slavery is beyond consideration and the phrase "slave wages" is entirely misleading. If a man receives wages, he is not a slave but a seller of his labor. If he is a slave, he does not receive wages: he is property and receives whatever his owner wishes in order to maintain his property. Slavery is not a system of production in any sense, though slaves may produce--rather it is a social or political system. It is a simple fact that the forced performances of men not at liberty to choose among employments on the basis of their own preferences for those best available CANNOT yield profit on a market also permitting free labor. In such competition, slave-based enterprise ALWAYS becomes marginal--a losing proposition for the class of men owning other men. This is why, throughout all known history, certain industry segments were "set-asides,"--reservations where free labor was not permitted--prevented in some cases by custom but more usually by law. BUT IN ANY SYSTEM IN WHICH PROFIT IS NOT THE ORGANIZING PRINCIPLE, IT IS INEVITABLE THAT THE CONDITION OF WORKERS MUST BECOME THAT OF SLAVES. If men cannot compete for the best choice of employment opportunities on the basis of their ability to generate profit to their employers, some other method must be sought by which to assign tasks, workplaces,
working conditions, as well as which to educate in more skilled or intellectual effort--and to whom to assign managerial functions. What is to be paid cannot be based on a market where there is no market; penalties, rather than incentives, need be instituted.
The system of all-around slavery--compulsion rather than choice in production and distribution of economic goods--has a name. The name is SOCIALISM. The fact is that EVERY socialistic step is a step in the direction of slavery (and poverty). And EVERY step away is a step toward liberty and prosperity. That is what is at stake; that is why we contend.
It also might be noteworthy, Brooks, that the record is aware of only one U.S. President who was aware of the writing of Mises. That one was Ronald Reagan, described in a 1976
news interview/article (while still Gov. of CA) as having foregone all reading of fiction and, indeed, all "pleasure" reading, to concentrate on the works of Mises and other "Austrians."
I myself was made aware of that fact by a committed leftist--my sister--in some disparaging comments about RR made only about 10 years ago.
Published: January 12, 2005 8:53 AM
Brooks:
Mises was a prolific author, especially considering the complexity of his subject. I would admit that reading HUMAN ACTION is at least somewhat daunting. But among his works is one almost atypical when considering the rest. It is short (125 pages, 5 X 8"--pocket-novel size), relatively simple both to read and to comprehend, and addressing a single subject of everyday interest to most people. Its title is BUREAUCRACY. You can
even read it online on this site at no cost. And, once you do, you will not only understand the subject to a degree you never thought posssible, you'll know (and KNOW that you know) more about the subject than anyone you're ever liable to meet. And, if it whets your appetite for more Mises, so much the better!
Published: January 12, 2005 9:15 AM
Gene,
Your first point is that I am saying owners will generally go without the workers needed for profit in order to keep wages low. I agree they would not do this. My point is only in the positions of negotiation, for example, with everyday commodities, who cares if I buy an apple or not. But if I continually refuse jobs, eventually I starve, but the owner will only be one short if he doesn't take my wage offer. You see neither of us would do that though it is to our advantage to, be hired and to hire. But our positions are clear he can clearly, and knowingly live without me, and has replacements waiting to come in if I demand too much wage. I do not have as easy a replacement job, I would remain on the bottom wage, whether it be min. wage or the very low market wage. (Accepting that many move up, some do not, and there will always be people at the bottom wage.)
==(NOTE ALSO that, until such condition is met--that the consumers have all they want of everything they might want, whether good or service, i.e., until everyone is completely satisfied--there are jobs to be had
at wages which will at least satisfy the requirement summed up in the phrase "the bare minimum."
What does this mean? That since not all peoples want and needs are met there will always be a supply of jobs? But we know there to be a surplus of labor over the number of jobs available. Under what definition is 'the bare minimum'? You mean the market decided wage, subsistence wage, what?
You say it isn't the owners fault that the worker is 'submarginal' and not worth a full wage. The owner and/or society, through gov't, decide what is an unacceptable wage to keep someone at. The owner decides that this desperate person is worth so little that they can barely live on the wage he offers. I consider it immoral to pay someone a subsistence wage based on the fact that you know you can and the person accepts your offer. Like giving a starving man a cracker to clean your shoes, or a man without water a liter if he washes your car. Of course he takes it, he has to eventually.
Slavery. First you make no mention of a prohibition on slavery just that it is unsustainable. I can only assume you would not prevent it, so it would be legal, not prohibited. I would think allowing people and businesses to experiment with slavery, because you assert it will not sustain itself to be morally questionable. Second you assert that slave owners would lose against owners with freeman as workers. You also say that freemen were prevented from working against slave jobs legally, but as very few in the southern farms actually owned slaves this would mean that the slave farms would be unsustainable against their waged farmed neighbors. But I haven't seen evidence for this, nor logic. You can keep your slaves at subsistance resources, or work him to death, I see no reason, except some disincentive for hard work, nothing the wip couldn't fix, that a slave farm would inherently fail against waged farms.
==The fact is that EVERY socialistic step is a step in the direction of slavery (and poverty). And EVERY step away is a step toward liberty and prosperity.
I would say this absolute is patently false, without a min. wage or an education, liberty and prosperity will not be had by many at the bottom. They will be slaves to their ignorance and absolute needs to survive. I would consider their condition slavery and poverty.
Brooks
Published: January 12, 2005 11:43 AM
Perhaps I was too implicit in my comments about government intervention. Employer and employee are not in an equal situation precisely because we do not have a free market--government intervention has largely benefited bigger, more established companies and corporations by making it more difficult for competing businesses to get started and to expand (sometimes intentionally, sometimes not). The result is fewer businesses competing for labor. This is one important factor that lowers wages below actual market price.
As for the second point, it doesn't really matter where the money is coming from to pay for the increase, not even if it's from "profits" (what do you think companies do with profits?). It's still money that was being spent elsewhere in the economy but no longer is. The reduced demand and its consequences still exist. Productivity has still been lost, and only productivity gains can make that up--government can effectively do nothing to mandate increased productivity.
Published: January 12, 2005 12:19 PM
Oh, okay, I'll address slavery, too. While I would tend to agree that slavery is economically unfeasible, the economics of slavery has little to do with morality, except for the obvious point that a free market requires voluntary exchange and freedom of trade. Thus any actual slave labor reduces the freedom of the market. But as Gene said, "slave wages" is logically inconsistent.
One point that many people seem to have trouble with is distinguishing between natural and human causes in economics and politics. The fact that resources are scarce is a natural cause, and much of business is about dealing with that fact, allocating resources to where they are most needed and desired in the economy. The value that people place on scarce resources, on the other hand, is man-made, even if you consider that some valuation seems to have a basis in nature, like hunger and the need for food. It is unreasonable to expect businesses or the economy in general to somehow change nature, especially considering that everybody is affected by natural causes, employer and employee alike.
Another point of concern for me is that many people expect all jobs to pay a living wage. While it may be beneficial to companies to consider the livelihood of their employees, it seems unreasonable that ALL jobs should pay a living wage. What about part-time work for students, retirees or stay-at-home mothers? What about people taking second jobs not because they need to, but because they want to, as in making money at a hobby they like, or for charity work?
Not all types of labor require a full-time job, either, so to make a "full-time" job would sometimes require putting different jobs together for a single person to do.
Published: January 12, 2005 12:54 PM
Brooks:
It would be a fair statement to make, regarding slavery (and especially that prevalent in the U.S. befor the civil war) that, had the slaveowners understood economics, they'd have pursued other means of exploiting their land rsources. It is a simple fact of history whiuch you may investigate that every single member of the Confederate administration (with the exception of Judah Benjmin, who ws not a planter) was in debt to near-bankruptcy--mostly to Northern banks. The typical slaveholding agricultural enterprise--throughout the south--was indebted for years' worth of their potential production and, significantly, their debts would have been long "called" if it were not for an equal ignorance on the part of the bankers concerned, who included, in the collateral accepted as surety, the prevailing "market value:" of the slave stock--in most cases, the major asset of the enterprise concerned. I only am aware of these things is because, in 1955, someone paid me $100 to write a term paper on "The Economics of the Confederacy," which I promptly forgot and did not recall for nearly 25 years (after becoming interested in Economics).
Your various rejoinders are only illustrative of muddled thinking but aso suggest that you have no commitment to an honest, straightforward exchange; that deduction follows from instances in which you attribute beleifs or attitudes to me which I did not express (nor do I hold). But it is interesting that you broach the topic of competition with
free farmers in the south--because that was precisely one of the great problems facing both bonded and free labor. Slaveowners attributed their inability to generate profits not only to their free competitors--mostly small holdings employing only their own family efforts--but also to a declinig fertility of the land itself, for which they clamored politically for an extension of slavery into new territories. Their free neighbors, though resenting their unfree labor competition, yet supported such extension, believing it would lessen their most direct, local competition. So, a good time was had by all.
No specific laws other than those forbidding assault and unlawful detention are necessary to prevent slavery; it might be argued that, without such laws, it would be impossible to prevent slavery by "agreement but the simple refutation of that assertion is to be found in recognizing that, if such a slavery-enabling agreement were to exist, it would be beyond the capability of authority to detect, much less prevent or punish. There are indeed, potential conditions of contractual servitude but there is no particular need to treat those here--in any case they are illegal, though equally impossible of prevention, given determined conspiring parties. Without opening a new avenue for argument, I'll simply offer one for your own thought: with the supposed advantage of slave labor, why weren't most, indeed all--productive enterprises depending in large part on labor (as most were) concentrated or even located entirely in the south (when the fact is almost the reverse: only those industries whose output depended on the climatic and soil characteristics peculiar to the south were located there; most every type of industrial production was in the north, as were even the great majority of those types producing hay (an important crop for the feeding of horses), structural lumber, quarrystone, etc.--all products employing substantial inputs of human labor and where, were your prepossessions to be correct, one would have expected n opposite reality. Even those industries in which raw power was a major input--those for which waterpower provided most of the energy and where the clearest delineation could be observed of the relative efficacies of slave vs free labor--were located almost exclusively in the north.
On and on, bud; the questions of the bright but under-educated are endless; all the answers are available--I've pointed you in the right direction and the rest will be up to you.
Published: January 12, 2005 1:55 PM
Michael,
Most min. wage comes from small businesses. What does gov't intervention have to do with the fact that owners are coming from a profitability/productivity standpoint with many applicants, and workers are coming from a survival position with few options? More small businesses would likely create a situation of more competition and tighter profit margins, without a min. wage all businesses would end up fighting labor costs downward even more aggressively, but with min. wage all start on the same foot, per worker. (And I would agree that big business uses gov't to intervene for their interests, which should be the first concern of freedom lovers not the lowest worker's protections.)
Why would you think that demand comes 'better' from profit then from wages? It isn't gov't bureacracy it goes into it goes into workers pockets, who spend it into the economy.
Full time work vs. part time or student, etc. can be solved pretty easily, heads of household get different tax breaks for kids, etc. Kids and grandads, part time work, just details. Paying a kid 8/hour isn't going to break the bank. If we differentiate, then empoloyers will just follow the bottom. Hiring old and young disproportionately because of their cheap costs.
Brooks
Published: January 12, 2005 8:04 PM
More competition includes more competition for labor, as well, which means that a downward spiral for wages wouldn't occur.
Demand from spending profits isn't all that different from spending wages. However, profits that are reinvested is money that is being used to increase productivity. Sure, people with wages could also invest instead of spend, but they are less likely to, and to a lesser degree.
It doesn't matter, however, if workers who receive a minimum wage increase spend all of their extra money. The increase is not simply a matter of transferring money from one part of the economy to another. The amount of money is the same, but the productivity lost from the forced transfer is still gone, and only additional productivity gains can make that up, not the redistribution of money.
Look, suppose the government slapped on a $1 per gallon tax on gasoline. What would you do? Would you cut back on driving to buy less gas? Would you spend extra money buying a more fuel-efficient vehicle? Would you try to earn more money somehow by working overtime or getting a second job? Would you spend less money on other items in your budget, like eating out less often, or buying fewer dvd's?
If you don't or can't increase your income (your productivity), then the amount of money you have every paycheck hasn't changed, but you cannot afford to buy the same amount of goods and services as before, even if every penny of the new tax money was spent efficiently (say on road maintenance or public schools) and not "wasted".
Businesses are in the same kind of situation when dealing with a minimum wage increase. Same amount of money, but they can't buy as much as before, unless they can increase productivity somehow to make up the difference.
Published: January 12, 2005 9:24 PM
More competition includes more competition for labor, as well, which means that a downward spiral for wages wouldn't occur.
Demand from spending profits isn't all that different from spending wages. However, profits that are reinvested is money that is being used to increase productivity. Sure, people with wages could also invest instead of spend, but they are less likely to, and to a lesser degree.
It doesn't matter, however, if workers who receive a minimum wage increase spend all of their extra money. The increase is not simply a matter of transferring money from one part of the economy to another. The amount of money is the same, but the productivity lost from the forced transfer is still gone, and only additional productivity gains can make that up, not the redistribution of money.
Look, suppose the government slapped on a $1 per gallon tax on gasoline. What would you do? Would you cut back on driving to buy less gas? Would you spend extra money buying a more fuel-efficient vehicle? Would you try to earn more money somehow by working overtime or getting a second job? Would you spend less money on other items in your budget, like eating out less often, or buying fewer dvd's?
If you don't or can't increase your income (your productivity), then the amount of money you have every paycheck hasn't changed, but you cannot afford to buy the same amount of goods and services as before, even if every penny of the new tax money was spent efficiently (say on road maintenance or public schools) and not "wasted".
Businesses are in the same kind of situation when dealing with a minimum wage increase. Same amount of money, but they can't buy as much as before, unless they can increase productivity somehow to make up the difference.
Published: January 12, 2005 9:26 PM
Gene:
==It would be a fair statement to make, regarding slavery (and especially that prevalent in the U.S. befor the civil war) that, had the slaveowners understood economics, they'd have pursued other means of exploiting their land rsources. It is a simple fact of history whiuch you may investigate that every single member of the Confederate administration (with the exception of Judah Benjmin, who ws not a planter) was in debt to near-bankruptcy--mostly to Northern banks. The typical slaveholding agricultural enterprise--throughout the south--was indebted for years' worth of their potential production and, significantly, their debts would have been long "called" if it were not for an equal ignorance on the part of the bankers concerned, who included, in the collateral accepted as surety, the prevailing "market value:" of the slave stock--in most cases, the major asset of the enterprise concerned. I only am aware of these things is because, in 1955, someone paid me $100 to write a term paper on "The Economics of the Confederacy," which I promptly forgot and did not recall for nearly 25 years (after becoming interested in Economics).
What is the evidence that the debt came from being a slave farm vs. a free farm, and not say insane tarriffs, or destroying their crops during the war to try and force Europes hand, or bad management, or some other unrelated force at work?
==Your various rejoinders are only illustrative of muddled thinking but aso suggest that you have no commitment to an honest, straightforward exchange; that deduction follows from instances in which you attribute beleifs or attitudes to me which I did not express (nor do I hold). But it is interesting that you broach the topic of competition with
free farmers in the south--because that was precisely one of the great problems facing both bonded and free labor. Slaveowners attributed their inability to generate profits not only to their free competitors--mostly small holdings employing only their own family efforts--but also to a declinig fertility of the land itself, for which they clamored politically for an extension of slavery into new territories. Their free neighbors, though resenting their unfree labor competition, yet supported such extension, believing it would lessen their most direct, local competition. So, a good time was had by all.
Since people were refusing to address my questions directly I only assumed what those answers could be, qualifying that, 'I can only assume you mean this'. Not saying I know you think such and such. It sounds like everyone was blaming each other for everything, but without numbers to show free beats slave or reasoning as to why, we have nothing to go on.
==No specific laws other than those forbidding assault and unlawful detention are necessary to prevent slavery; it might be argued that, without such laws, it would be impossible to prevent slavery by "agreement but the simple refutation of that assertion is to be found in recognizing that, if such a slavery-enabling agreement were to exist, it would be beyond the capability of authority to detect, much less prevent or punish. There are indeed, potential conditions of contractual servitude but there is no particular need to treat those here--in any case they are illegal, though equally impossible of prevention, given determined conspiring parties. Without opening a new avenue for argument, I'll simply offer one for your own thought: with the supposed advantage of slave labor, why weren't most, indeed all--productive enterprises depending in large part on labor (as most were) concentrated or even located entirely in the south (when the fact is almost the reverse: only those industries whose output depended on the climatic and soil characteristics peculiar to the south were located there; most every type of industrial production was in the north, as were even the great majority of those types producing hay (an important crop for the feeding of horses), structural lumber, quarrystone, etc.--all products employing substantial inputs of human labor and where, were your prepossessions to be correct, one would have expected n opposite reality. Even those industries in which raw power was a major input--those for which waterpower provided most of the energy and where the clearest delineation could be observed of the relative efficacies of slave vs free labor--were located almost exclusively in the north.
On and on, bud; the questions of the bright but under-educated are endless; all the answers are available--I've pointed you in the right direction and the rest will be up to you.
I hardly think the north not having slavery is much evidence against the south's possible economic advantage of slavery, which the north feared. The reasons why slavery were in the south and not north, social, historical, racial, later moral, there are many places that seem more likely then the unsustainable economics of slavery. Appreciate the backhanded comment there at the end, I'm here to learn or educate which ever comes first.
Brooks
Published: January 13, 2005 8:22 AM
==More competition includes more competition for labor, as well, which means that a downward spiral for wages wouldn't occur.
Not if there is a surplus of labor, the competition would be between businesses, hence tighter margins, better prices on goods, but more push to cut costs. Including labor costs. If these businesses grew enough to shorten the labor supply, then wage pressure would be upward bound.
==Demand from spending profits isn't all that different from spending wages. However, profits that are reinvested is money that is being used to increase productivity. Sure, people with wages could also invest instead of spend, but they are less likely to, and to a lesser degree.
Spending is the more important action not investing. You can invest and expand a business all you want if no one is buying, it's all for nothing.
==It doesn't matter, however, if workers who receive a minimum wage increase spend all of their extra money. The increase is not simply a matter of transferring money from one part of the economy to another. The amount of money is the same, but the productivity lost from the forced transfer is still gone, and only additional productivity gains can make that up, not the redistribution of money.
Productivity? Units produced per worker? Or units per price of worker? If the first, I don't see the relavence. If the second unless an industry is on the cusp, they will not raise prices so the cost increase comes from company profits.
==Look, suppose the government slapped on a $1 per gallon tax on gasoline. What would you do? Would you cut back on driving to buy less gas? Would you spend extra money buying a more fuel-efficient vehicle? Would you try to earn more money somehow by working overtime or getting a second job? Would you spend less money on other items in your budget, like eating out less often, or buying fewer dvd's?
No. I would do the same. The next time I could buy a car, I would look for more efficient vehicles. That's about it.
==If you don't or can't increase your income (your productivity), then the amount of money you have every paycheck hasn't changed, but you cannot afford to buy the same amount of goods and services as before, even if every penny of the new tax money was spent efficiently (say on road maintenance or public schools) and not "wasted".
Not sure the point, I agree money is less efficient in gov't hands. We're talking workers hands.
==Businesses are in the same kind of situation when dealing with a minimum wage increase. Same amount of money, but they can't buy as much as before, unless they can increase productivity somehow to make up the difference.
Or it comes out of profit which might not be buying anything. It might pay off debt, go into savings, go into dividends, go to the owner, etc. And again the assumption is the money will be better spent, if spent, by the business instead of the worker.
Brooks
Published: January 13, 2005 8:50 AM
There is nothing any government can do about the minimum wage. It is, always has been, and always will be the same: $0.00
Published: January 13, 2005 11:20 AM
==More competition includes more competition for labor, as well, which means that a downward spiral for wages wouldn't occur.
Not if there is a surplus of labor,
Of course not if there is a surplus of labor. But more competition will use up the surplus--less competition certainly won't.
Consider: If there are 10 job-seekers, but only 5 companies are looking to hire one worker each, then obviously, 5 of the job-seekers would remain unemployeed, at least for the time being. But if there are 15 companies that are hiring, all ten job-seekers would be employed, and 5 of the companies will have to do without. Which 5? the 5 that the job-seekers perceived to be the worst employers in terms of pay, benefits, working conditions, etc., whichever factors the job-seekers considered to be the most important.
Spending is the more important action not investing. You can invest and expand a business all you want if no one is buying, it's all for nothing.
Spending and investing are both important. If there's a shortage of production, costs go up and people cannot afford to buy as much. If productivity is increased, costs go down and people can buy more. The challenge to businesses is to consider how much investment people are willing to support, how much spending they are willing to defer, which is where interest rates come into play.
No. I would do the same.
If you have to pay more for the same amount of goods or services, you can't afford to do the same! You would have to either make more money or buy fewer goods and services. Of course, where you cut back would still be your decision.
Or it comes out of profit which might not be buying anything. It might pay off debt, go into savings, go into dividends, go to the owner, etc.
If it pays off debt, then the creditors are spending it or reinvesting it. If it goes into savings, then it's being loaned out for other investments. If it goes into dividend payments or to the owner, then it's being spent or reinvested by the owner or recipient. In any case, the money is already being used in the economy somewhere. If it's diverted to pay for a forced, unproductive increase, you've lessened demand in other areas of the economy, or worse, lessened investment for increased productivity.
And again the assumption is the money will be better spent, if spent, by the business instead of the worker.
No, I'm saying that by paying more for the same amount of goods and services, a productivity loss has been created, and people can afford to buy less than before. This is true whether we're talking about minimum wages, price controls, or increased taxes. If the diverted money would have been invested, and not just spent, then you've also prevented productivity gains by the loss of investment, in addition to the productivity loss.
Published: January 13, 2005 11:31 AM
M "More competition includes more competition for labor, as well, which means that a downward spiral for wages wouldn't occur.
==Not if there is a surplus of labor,
M--Of course not if there is a surplus of labor. But more competition will use up the surplus--less competition certainly won't.
How many times in history have there been shortages of unskilled labor? I would guess very very few.
==Spending is the more important action not investing. You can invest and expand a business all you want if no one is buying, it's all for nothing.
M--Spending and investing are both important. If there's a shortage of production, costs go up and people cannot afford to buy as much. If productivity is increased, costs go down and people can buy more. The challenge to businesses is to consider how much investment people are willing to support, how much spending they are willing to defer, which is where interest rates come into play.
Who are people? It sounds like you're saying that the owners lose a little and that is worse then the workers getting more. Economically that is.
==Or it comes out of profit which might not be buying anything. It might pay off debt, go into savings, go into dividends, go to the owner, etc.
M--If it pays off debt, then the creditors are spending it or reinvesting it. If it goes into savings, then it's being loaned out for other investments. If it goes into dividend payments or to the owner, then it's being spent or reinvested by the owner or recipient. In any case, the money is already being used in the economy somewhere. If it's diverted to pay for a forced, unproductive increase, you've lessened demand in other areas of the economy, or worse, lessened investment for increased productivity.
Again you are saying that a min. wage that gives workers more money is an 'unproductive increase' that is worse for the economy then being left in the company.
==And again the assumption is the money will be better spent, if spent, by the business instead of the worker.
M--No, I'm saying that by paying more for the same amount of goods and services, a productivity loss has been created, and people can afford to buy less than before. This is true whether we're talking about minimum wages, price controls, or increased taxes. If the diverted money would have been invested, and not just spent, then you've also prevented productivity gains by the loss of investment, in addition to the productivity loss.
Same as above, worker pay increases are worse then businesses with the money, in your theory. But if people, especially lower end people, have more money, they need to spend it. Putting it right back into the economy. Economically the best thing for business is for people to be buying.
Brooks
Published: January 13, 2005 8:21 PM
You've yet to explain how workers can buy more if less is produced. It's this productivity loss that you don't seem to understand. Obviously, if workers can increase their productivity, then a pay increase would be worth it. But increased productivity doesn't happen automatically just because a worker is paid more.
You also didn't explain how you can afford to pay more (vis the gas tax example) without making more (or otherwise cutting back somewhere else).
Published: January 14, 2005 12:52 PM
Brooks- just out of curiosity are you in favour
of maximum wages for highly skilled professionals
(ie doctors) so that the poor can more easily afford their services? We have that situation in
Canada and the result is shortages and long waits for even the most basic procedures.
Published: January 14, 2005 3:22 PM
==You've yet to explain how workers can buy more if less is produced. It's this productivity loss that you don't seem to understand. Obviously, if workers can increase their productivity, then a pay increase would be worth it. But increased productivity doesn't happen automatically just because a worker is paid more.
You are assuming that when workers are paid more, they must have less workers and therefore less goods produced. This isn't necessarially true, in fact usually not true. Money can come from profit instead having to reduce workers who produce something. In fact if the company sees demand for it's product it will likely cut producing workers last, not first. It's where all their money comes from. Second is that a production shortage would immediately lead to a price rise, and that it would affect all industries. Demand vs. supply is rarely so tightly monitored and not all industries use min. wage labor, so they would have no change in productivity.
==You also didn't explain how you can afford to pay more (vis the gas tax example) without making more (or otherwise cutting back somewhere else).
You were right, I thought you were refering to me lessening my demand for gas which I wouldn't. I would of course have to pull the money from somewhere else.
Brooks
Published: January 17, 2005 12:31 AM
==Brooks- just out of curiosity are you in favour
of maximum wages for highly skilled professionals
(ie doctors) so that the poor can more easily afford their services? We have that situation in
Canada and the result is shortages and long waits for even the most basic procedures.
No, maximum wages are idiotic and do nothing but prevent the market from deciding the high end of wages. (Since my stance on min. wage is for a min. standard which we should not go below, and that the nature of the unskilled labor market at the bottom will always push downward, max wage is not relevant to me.)
Brooks
Published: January 17, 2005 12:37 AM
I don't know what else I can say that I haven't already said.
You are assuming that when workers are paid more, they must have less workers and therefore less goods produced.
Again, no. What I am saying is that when an individual or business has to pay more for the same quantity of goods and labor, they necessarily have less money to spend elsewhere. The fact that you are spending more for the same amount (be it goods or labor) is the cause of the productivity loss, and shows that this is not just a redistribution of money from one sector to another.
Again, only a productivity gain can make up for the productivity loss. If the workers increase their productivity, or if the business itself could increase productivity, then the productivity loss could be "made up". But productivity increases don't happen automatically or on demand.
Consider it from this angle: prices change all the time to reflect various changes in supply and demand. These are economic factors indicating productivity changes, consumers' changing needs and desires, and the development and phasing out of various goods and services. Prices reflect the relative value and availability of goods and services and their component resources. When the government legislates a price control, such as a minimum wage increase, this is not an economic factor, but a political factor. Supply and demand has not changed, but the price structure no longer reflects that.
The value of the minimum wage worker's skills (his productivity) to the business has not changed, but government has said that they must pay more, anyway. That's the productivity loss. Just as the individual must decide how to deal with a price increase, a business also must decide how to deal with this price increase, and the business' options aren't really all that greater than the individual's options: cut back somewhere or become more productive.
Second is that a production shortage would immediately lead to a price rise, and that it would affect all industries.
I didn't say that it would immediately lead to price increases, but I do say that it eventually would. The immediate impact would probably be price decreases, actually, as businesses find that they've produced more than people can afford to buy. But then businesses would cut back production to avoid future surpluses. Which industries would be affected sooner depends upon the decisions made to cut back expenses, and thus is not really predictable, but it's difficult to imagine that there would be any industry that would not eventually be impacted by the rippling economic currents.
...and not all industries use min. wage labor, so they would have no change in productivity.
Even businesses without minimum wage workers could be impacted, depending upon the decisions made by businesses with the minimum wage workers in cutting expenses. Still, the fewer workers who are impacted by the increase, the less harm would be done to the economy. Raising the minimum wage from $5.15/hour to $5.50/hour wouldn't be as harmful as raising it to $7.00/hour. But some degree of harm would still occur, unless productivity gains could be made somewhere to make up the difference.
Published: January 17, 2005 3:39 PM
---You are assuming that when workers are paid more, they must have less workers and therefore less goods produced.
==Again, no. What I am saying is that when an individual or business has to pay more for the same quantity of goods and labor, they necessarily have less money to spend elsewhere. The fact that you are spending more for the same amount (be it goods or labor) is the cause of the productivity loss, and shows that this is not just a redistribution of money from one sector to another.
==Again, only a productivity gain can make up for the productivity loss. If the workers increase their productivity, or if the business itself could increase productivity, then the productivity loss could be "made up". But productivity increases don't happen automatically or on demand.
I think you are confusing concepts here. The fact that a business pays more for an aspect of its business does not make it a productivity loss. Increasing productivity through a new device that produces twice as much an hour or with only 3 workers instead of 10, these are productivity increases. Increases in pay affect a companies bottom line, profits, etc. but do not effect their productivity unless they are forced to specifically cut back on production. Which few would do if the demand is there. If you make lug nuts, you cut anything but production if there are orders for lug nuts, else your customers will go elsewhere.
Brooks
Published: January 17, 2005 10:02 PM
Their actual production is not initially affected, but because of the price increase in labor, they have to cut back on expenses somewhere, which means they spend less on other things, that is, things that *they* buy from other companies, and therefore, other companies are now overproducing and have to cut back on their production. (or, as I said, if they raise their prices to make up the difference, then their customers are the ones who have to spend less on what they buy from companies, and the companies they buy from are overproducing and have to cut back).
Using profits to pay for the increase simply transfers the issue of where less money is spent, and thus which companies are subsequently affected, but there still remains the same basic problem: the same amount of money can now buy fewer goods and services as before. Unless a sufficient productivity increase occurs somewhere, production has to be cut back to match the new, lesser spending power that now exists.
Note also that a company initially affected by the wage increase may eventually have to cut its production anyway if other companies or customers end up buying less from the initially-affected company because of spending cuts throughout the economy.
Published: January 18, 2005 12:53 AM
I'm lost with all this stuff. I've been a stay home mom for several years and unfortunately depended on the income of my husband. I've been blessed to have had jobs that paid me way over the minimum wage amount with wonderous benifits. It's been a while and I'm now going back out into the working field even if I have to start at the bottom of the ladder and work my way back up. All I want to know is how low the ladder is as far as pay??
As of 3/2/05 what are employers paying for minimum wage in the state of Florida? When is it supposed to go up and how much? An answer to this A.S.A.P would be greatly appreciated. I wouldn't want to get hired at an offered amount of $6.00 an hour and find out I gave the employer a discounted rate.
Some one please help???
Published: March 2, 2005 7:07 PM
Minimum wage in FL is $5.15 and hour. It will go up to $6.15 an hour on May 2.
Published: March 2, 2005 9:03 PM
Actually, it is possible to work for nothing---it's called volunteering. Many non-profit organizations rely on this free labor. But why should it be illegal to work for one dollar an hour, but legal to work for nothing?
Published: March 3, 2005 5:09 PM
Mark, the answer is pretty simple if you think about it. If you're volunteering, then you obviously aren't working to make a living. The underlying premise is that employers owe living wages to their employees, regardless of the nature or type of employment. Thus, the rhetoric is changing from "minimum wage" to "living wage".
Published: March 4, 2005 12:17 PM