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I'm still mulling it over.
On the one side, we clearly have a portion of the country that works for minimum wage and (arguably) has done nothing to justify an increased wage. There's also the argument that an increased minimum wage will force small business owners to lay off employees when they're already operating at razor-thing profit margins, but I have yet to see any numbers that would indicate that that's actually a threat.
But on the other, the top 1% of American earners have captured over 100% of the economic recovery gains, and that's just absurd. The whole point of a recovery is to boost the economy for the entire country, not to solely line the pockets of the rich. When there's profit clearly being made and not a penny of it is going to the lower or middle classes, I think something does need to be done about that.
I'm also a huge supporter of a living wage, and this is a step towards that. Personally, I don't really buy the arguments that raising the minimum wage will cause a massive job loss, so I'm not really seeing too many downsides.
So, basically, here's how I come down: the federal minimum wage should absolutely be pegged to inflation so it automatically adjusts. As for raising it now (or rather, in stages until 2015), I'm torn. I think the sights should be set lower, and I'd be in favor of a raise that would just go up $1 over the course of the next 2 years, and then we could reevaluate the state of the economy in 2015 with a minimum wage of $8.25/hour.
Just another blurb, if companies do simply pass on the cost to the consumer, what is the benefit? Inflation.
A viable way to get yourself out of a debt crisis is to decrease the value of your currency. (An extreme example: Say you owe a guy a a pound of gold. You buy a pound of gold for $1000, but the next day, the price drops to $500. You basically screwed yourself out of $500 by paying him back at "full price".)
The US government has some control over the value of it's currency, and therefore, if you inflate your currency (thus, decrease the value of your debt), you can make the debt easier to pay off or make your balance sheet look better.
You've entangled two issues, and I say unnecessarily.
One of my major complaints about Obama has been his continuation of crony capitalism, which you adequately describe. Corporations, particularly of the international variety, have done absurdly well. The fact that the capital gains tax increase and the closing of tax loopholes to increase revenues aren't passing through congress more easily is mind-boggling.
What this has to do with the minimum wage argument, I don't understand.
Inflation will rise, jobs will be lost.
Great plan, IYAM.
Photo Credit: AP The minimum wage is a major anti-jobs policy. Some political jurisdictions take it further, San Francisco has a minimum over $10 [...]
Interesting analysis on minimum wage issue
Should the federal minimum wage go up by more than $2?
You may run like Hayes, but you hit like $*!#
This is not intended to sound snide and may come off as a stupid question. If the min wage is raised and inturn the cost if gods/services is raised to offset that increase has anyone gained anything other than the govt who now has more taxable income to take. Although we disagree on most things you will atleast give a rational response. And like I said I'm no economist so I'm not above hearing an idea or thought
The government wins twice - more taxable income, and their debt is less valuable.
People with investments in things like houses win because their house is worth more dollars since the dollar is worth less.
People with investments saved as cash lose.
Just that many of the workers targeted here are employees of of large multinational corporations who have done extremely well under the last few regimes, and whose execs have gobbled up the lion's share of profits of what little economic recovery we've had. (Wal-mart is a perfect example).
I mention them only to indicate that the employers of many minimum-wage workers aren't operating on razor-thing profit margins - they're actually doing very well, and a small minimum-wage increase wouldn't exactly put them out of business.
Here's the problem with that line of thinking - what has kept wages depressed below even the rise of inflation the past 40 years is a fairly steady unemployment. This number needs to be attacked. As of right now, Wal-Mart has no incentive to increase wages, based solely on a the supply-demand curve for labor being so skewed towards supply.
Obviously, if I'm a top exec at a multi-national corporation, I'm not going to pay my replacement level employees more just because I'm (edit: the company is) doing well. That's trickle-down at it's dumbest. I'm going to reward my shareholders and collect my bonus. And that's what has happened.
You can try and constantly legislate your way out of it, but because everyone will have to compensate for the wage increases, you've only put a temporary band-aid on the supply-demand labor issue by forcing the wages of the select few who are employed to go up. You haven't attacked the real issue, and in fact you've made the real issue worse by making some jobs disappear.
This post was edited by ramssuperbowl99 17 months ago
Minimum wage workers have gained something because the corresponding cost increase in the price of goods and services will negatively affect them less than the minimum wage increase will positively affect them.
Arguably, the economy as a whole will benefit - minimum wage workers make up a surprisingly small percentage of the country (estimates are that this increase will affect about 15 million workers), so raising their wages will result in more consumer spending. This is not a portion of the population that can really afford to save much of anything, so every extra dollar they get will be poured back into the economy, rather than left to sit in a bank or relatively stagnant investment vehicle.
But under that premise for it to be a success there would have to be no increase in the cost of goods/services. I think there is 0% of that happening
Seems like its trading dollar for dollar but the downside is giving businesses a reason/excuse to raise prices.
The thing is, I don't buy the argument that the few jobs lost by this move won't be offset by the corresponding shot in the arm given to consumer spending, since practically every dollar of this increase will be dumped back into the consumer economy.
While I agree that this is a band-aid and that the real issue is job creation, the only way to create an incentive to create more jobs is to demonstrate more willingness for consumer spending. The only way consumers spend more is if they have more to spend. Those on the bottom of the scale live paycheck-to-paycheck and, until the minimum wage reaches a living wage, these people can be reliably counted on to spend damn near every penny of their paychecks on consumer spending. One of the best ways to attack the job creation issue is to revitalize consumer spending, and one of the surest ways to do that is to raise the wages of the people who are most likely to spend the vast majority of the increase on consumer goods/services.
I think we can agree that the real issue is the supply-demand curve of the workforce. You're trying to increase the demand for goods by raising the minimum wage.
This is what I said earlier:
"There are essentially two ways to remedy this. The first is to raise the minimum wage. The second is to cut back on food stamp programs for the people working, and essentially force them to quit, which should force Wal-Mart to increase wages."
Personally, I would be much more willing to pay a 1-time increased tax rate to help out the quit/striking workers in order to reduce the supply of labor than I would be in favor of constantly trying to legislate an increased wage for those who are working.
I'm gonna need some time to get into this.
Couldn't the same infusion of spending be accomplished with tax cuts. It seems that tax cuts for middle/upper class would infuse money much faster than a min wage increase for such a small group of spenders. I know that sounds high and mighty but if things are to get going again it will be the people with more spending power who jump start the economy it would seem. Once the economy was going strong again them look at minimum wage. It seems like shooting yourself in the foot to try and fix min wage in a struggling economy.
It's basically redistributing that dollar to where it can be put to better use ("better" in the sense of "better for the economy.")
Here's a simplified example: You've got a 2-person company with a CEO and a worker. The CEO earns $1,000/hr., while the worker earns $7.25/hr. A minimum wage increase of $1/hr. would shift that to $999/hr. and $8.25/hr.
Now, the 1000th dollar that the CEO makes will most likely be saved. It'll go into a bank or an investment vehicle, but it won't be spent on consumer products. In contrast, since the worker does not earn a living wage, the extra dollar that the worker now makes will almost assuredly be spent on consumer goods/services. (I mentioned above how that corresponding increase will boost the economy - more consumer spending -> more demand -> more incentive to create jobs to respond to demand -> more income for those who previously had none -> more consumer spending, etc.)
As for the corresponding price increase of goods/services, that'll be spread out. If the CEO wants to continue making $1000/hr., they'll increase the price of the goods they produce. However, since those goods aren't all purchased by other minimum-wage workers, the subset of minimum-wage workers will not bear the entire brunt of the cost increase and will subsequently increase consumer spending by virtue of their now-greater purchasing power.
The thing is, more spending power =/= more spending. The trickle-down economy has pretty much been proven to be a failure of a theory over the last decade. Giving tax breaks to the upper/middle class merely gives money to people who can (and do) save it. To stimulate the economy, you want to give money to people who actually spend it. The most reliable subset of people for consumer spending are those currently earning less than a living wage, since they have to buy the necessities of life.
That's not really how it works. If you give a tax break to someone making $1M/year, they aren't going to go out and spend it at Walgreens or your neighborhood grocery store because they already buy everything they need from those places. They are going to save it or invest it in something like a mutual fund/property.
Now, there is a time for that. When interest rates are at really high levels, giving tax cuts to the people who save can basically act as an infusion of cash for a bank since the wealthy will save the tax cut dollars. That means banks have more capital, which means they can hand out more loans, which means supply for loans goes up, which means lower interest rates.
But right now interest rates are already low, in fact, you'd probably want them higher if you're the government. So you want to give a tax cut/increase pay for people who don't put money in banks - lower class workers.
Oh yeah but for me to talk about the study I'm gonna have to take some time and read it.
Micro is a good place to start, but with subsidized wages, supply-demand labor curves, and a ton of other stuff, the micro econ is just the beginning.
This is why I like you.
It makes sense in theory. The biggest positive would be that the ones benefitting would be working and not just collecting a check, but that's a whole different discussion
So I have a concern from this study.
It mentions a "significant size differential associated with the likelihood of the store closing" in regards to smaller stores/restaraunts not being able to handle the increase.
I think the idea that McDonalds won't be able to handle paying its employees an extra two bucks an hour is silly, but a mom and pop drug store might not have the capital.
This brings me back to another point - WalMart supports increasing the minimum wage, even though it will cost the government subsidies (making WalMart a bad example to use in the first place, my bad on that). Why? Because they know it will drive small businesses away.
This is pretty much what I suggested the other day, but was quickly called out as someone (not you) who would wreck the entire economy with this idea. Raise minimum to at least a living wage, people who need it will definitely go out and spend it intern benefiting those who are actually working.
This post was edited by Red Goodman 17 months ago
"Nobody makes me bleed my own blood, nobody!"
So doesn't that just hammer the "middle class". Big companies don't care, they can raise prices and eliminate competition at the same time.
Edit. I'm throwing small business owners/entrepreneurs in the middle class
This post was edited by B1G Badger 17 months ago
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