A Livable Minimum Wage

[Vociferous]

Lets say that I make roughly $40 an hour as a skilled cabinetmaker. All of a sudden the minimum wage takes a jump to $15 per hour. The cost of everything is going to increase with it, right? So, now I will have to increase my prices, or I will be taking an involuntary pay cut.. Raising the minimum wage that drastically will likely hurt the middle class.

Since the price of goods, those earning minimum wage purchase, rise with their wage, they essentially don't get a raise, while everyone else gets an effective pay cut. But hey, some people get to feel good about helping...someone.

 

[iceaura]

Since the price of goods, those earning minimum wage purchase, rise with their wage, they essentially don't get a raise,

That's not true. When labor costs rise, only some of the rise goes into price increases, and only some of the price increases are in goods or services purchased by minimum wage earners. So they get a raise, partly at the expense of their employer or investors, partly at the expense of the upper classes of consumer.

 

[iceaura]

When I asked you about those minimum standards, you brought up two-income households. Why? I don't know, considering most households were single-income in 1938.

That was the point. Anyone setting minimum standards in those days would have been assuming a single income household.

 

[Vociferous]

That's not true. When labor costs rise, only some of the rise goes into price increases, and only some of the price increases are in goods or services purchased by minimum wage earners. So they get a raise, partly at the expense of their employer or investors, partly at the expense of the upper classes of consumer.

So businesses just absorb the extra cost of doing business, by nobly sacrificing their profits?
Isn't it typically lower earners who produce most necessities, like agriculture, textiles, etc.? I mean, isn't there a reason illegal immigrants often do one and China the other?
How does the middle class of consumer pay more for the same necessities than the lower class?

That was the point. Anyone setting minimum standards in those days would have been assuming a single income household.

So how did you arrive at the notion that those minimum standards were meant to support a family on one income? It's not in the FLSA.

 

[iceaura]

So businesses just absorb the extra cost of doing business, by nobly sacrificing their profits?

No.

That's not true. When labor costs rise, only some of the rise goes into price increases, and only some of the price increases are in goods or services purchased by minimum wage earners. So they get a raise, partly at the expense of their employer or investors, partly at the expense of the upper classes of consumer.

The continual demand for introductory and remedial instruction in basic economics is getting old.

Isn't it typically lower earners who produce most necessities, like agriculture, textiles, etc.?

Some. Not medical care or housing, say.
And so? They don't buy them all. A lot of what minimum wage earners produce is purchased by the middle and upper classes.

How does the middle class of consumer pay more for the same necessities than the lower class?

They don't buy the same "necessities", and they buy more of other stuff. Housecleaning. Lawn care. Fresh fruit and vegetables. Meat. Shoes. Gadgets.

So the minimum wage hike is a real raise.
But it's a wage.

 

[Vociferous]

No.

That's not true. When labor costs rise, only some of the rise goes into price increases, and only some of the price increases are in goods or services purchased by minimum wage earners. So they get a raise, partly at the expense of their employer or investors, partly at the expense of the upper classes of consumer.

"Partly" noble?

The continual demand for introductory and remedial instruction in basic economics is getting old.

I assume this does something for your ego. But I'm just a loud primate, so it's lost on me.

Some. Not medical care or housing, say.
And so? They don't buy them all. A lot of what minimum wage earners produce is purchased by the middle and upper classes.

So even though the higher prices do hurt the minimum wage earner, it hurts others too?

Reminds me of a story I heard somewhere.

Say your boss comes in, thanks you for all your years of hard work, and gives you a bonus worth half your yearly salary. You'd be overjoyed, right? Who wouldn't be? Now you go to your coworkers to share your elation. You find out that everyone got a bonus, and that if anyone is dissatisfied all the bonuses will be lost. Are you any less happy with your own?
Now you find out that everyone else got a bonus worth their full yearly salary. Are you dissatisfied enough to both cost yourself half your yearly salary and cost all your coworkers their bonuses?

How people would answer says a lot about their character.

They don't buy the same "necessities", and they buy more of other stuff. Housecleaning. Lawn care. Fresh fruit and vegetables. Meat. Shoes. Gadgets.

So the minimum wage hike is a real raise.
But it's a wage.

Sorry, I didn't know toilet paper and Cheetos had different grades for each class.
Why isn't there just a push to raise wages for upper class services that wouldn't also effect the lower class?
Yes, I've known plenty of minimum wage earners who opted for fast food over fresh fruit and veggies, even when the latter was cheaper than the former.

 

[Seattle]

Who needs to permanently take a minimum wage job? Isn't it more effective to just move on to a higher paying job? Does anyone really need to be a cashier for life if they are counting on that job to support a family (as opposed to providing a little part-time income to supplement other family income)?

 

[billvon]

Since the price of goods, those earning minimum wage purchase, rise with their wage, they essentially don't get a raise, while everyone else gets an effective pay cut. But hey, some people get to feel good about helping...someone.

Well, they don't rise proportionally. For example, if minimum wage was doubled, the price of goods will not double, since goods/services pricing depends on more than labor costs.

But to your point, they do go up to some degree. Thus it's always a balancing act between minimum wage hikes, cost-of-living increases and inflation. You want to raise the minimum wage enough to get minimum wage earners out of poverty while not causing significant rates of inflation or COL increases.

 

[billvon]

Who needs to permanently take a minimum wage job? Isn't it more effective to just move on to a higher paying job? Does anyone really need to be a cashier for life if they are counting on that job to support a family (as opposed to providing a little part-time income to supplement other family income)?

Absolutely not! No one needs to be a minimum wage cashier. But some people are just not capable of being more than a cashier.

Remember, the IQ curve is centered around 100, and it's a normal distribution. So for every accomplished inventor, nuclear physicist or rocket scientist out there, there is someone who is as dumb as they are smart.

 

[Seattle]

Absolutely not! No one needs to be a minimum wage cashier. But some people are just not capable of being more than a cashier.

Remember, the IQ curve is centered around 100, and it's a normal distribution. So for every accomplished inventor, nuclear physicist or rocket scientist out there, there is someone who is as dumb as they are smart.

Everyone with minimum wage jobs aren't dumb. There are even jobs that pay more than minimum wage where you can be dumb.

Just because you pick up trash doesn't mean you are dumb, but you can be dumb and pick up trash and you will make more than the minimum wage.

 

[billvon]

Everyone with minimum wage jobs aren't dumb.

That is definitely true. Some - probably most - are smarter than they need to be for that job. But a few aren't - that's simply the best they can do. (I've worked with such people.)

There are even jobs that pay more than minimum wage where you can be dumb.

Yes, there are - but they are VERY few and far between.

Just because you pick up trash doesn't mean you are dumb.

Right. But some people pick up trash because that's really all they are capable of. Wishing these people away won't change that.

 

[Seattle]

That is definitely true. Some - probably most - are smarter than they need to be for that job. But a few aren't - that's simply the best they can do. (I've worked with such people.)

Yes, there are - but they are VERY few and far between.

Right. But some people pick up trash because that's really all they are capable of. Wishing these people away won't change that.

True, and I'm not wishing anyone away. I'm just saying that there is nothing special about minimum wage jobs and they pay what they pay. No one needs to stay at such jobs if they have a family to support.

There is manual labor, any government job, sales, all pay more than the minimum wage. Years ago, I was temporarily out of work and I went to a temp agency to find work while I looked for a permanent job.

The jobs they had were either work in a warehouse, or sit at a computer/phone and do basic stuff. Since I had a better chance for finding a better job while in an office at a computer I took those jobs. They were jobs most anyone could do however. I still made about $13/hr as I recall and this was 20 years ago. This was a lot more than minimum wage at the time.

It's actually hard to only make minimum wage. If you are in high school you might have few choices. By the time you are old enough to have a family to support you have to really not try to end up with a minimum wage job.

If you double the minimum wage you will just displace those "dumb" people you speak of. Some jobs will just go away as they will no longer be viable and other will be filled by more capable people. Either way, the least capable will be worse off.

 

[billvon]

True, and I'm not wishing anyone away. I'm just saying that there is nothing special about minimum wage jobs and they pay what they pay. No one needs to stay at such jobs if they have a family to support.

OK, let me give you a specific example.

When I was in high school I worked at a park as a laborer. I made minimum wage. The next year I got my lifeguard certification and subbed as a lifeguard on occasion and made more than minimum wage.

One of my tasks there was to babysit a janitor. He was a nice enough guy but had an IQ of about 70. He was required to have an assistant at all times when he was out maintaining the bathrooms in the park, because a few years before I got there he accidentally cut one of his fingers off while trying to change the toilet paper in a bathroom.

He had a girlfriend and was talking about getting married, but based on his conversations I suspected she would one day be shocked to find herself pregnant, and they'd be a family in any case.

This guy was simply not capable of doing anything else. He wasn't even capable of being a janitor on his own, and the county was doing him a favor keeping him employed. They recognized he would not be able to get a job anywhere else. He started at minimum wage and he did get occasional raises (because county rules say they have to) but he was paid as little as possible because he was so expensive to employ - the fallout from his injury was hideously expensive for the county, so much so that they absorbed the cost of having a full time assistant for him so it never happened again.

He HAD to stay in that job. If he lost it he would be in a world of hurt, because he was barely capable of interviewing for jobs to begin with, and had effectively no skills. You said above that you could always "sit at a computer/phone and do basic stuff" - he was not capable of that. You also said another option was to "work in a warehouse" - but if he tried he would either injure/kill himself or a coworker. It's easy to say that there's no need for people to stay in such jobs, but sometimes that's just not true.

(BTW I agree that displacing people like that by raising the minimum wage is a risk.)

 

[Vociferous]

Well, they don't rise proportionally. For example, if minimum wage was doubled, the price of goods will not double, since goods/services pricing depends on more than labor costs.

True in the short-term. But since it effectively devalues higher wages, it is a driver of inflation, which then causes a feedback loop in minimum wage hikes.
Considering that jobs paying minimum wage only exist because people volunteer to work them, there seems to be a demand for the current wage.

But to your point, they do go up to some degree. Thus it's always a balancing act between minimum wage hikes, cost-of-living increases and inflation. You want to raise the minimum wage enough to get minimum wage earners out of poverty while not causing significant rates of inflation or COL increases.

I didn't find anything about poverty in the FLSA.

 

[iceaura]

So even though the higher prices do hurt the minimum wage earner, it hurts others too?

The boosted wage helps the recipient more than the prices hurt. There's a net benefit, for them. We know this by arithmetic - they don't consume everything they produce.

But since it effectively devalues higher wages, it is a driver of inflation,

Or deflation, maybe. Or nothing. Depends.

Sorry, I didn't know toilet paper and Cheetos had different grades for each class.

Live and learn.

Why isn't there just a push to raise wages for upper class services that wouldn't also effect the lower class?

Nobody can figure out how to do that. The simpler approach there is to tax the upper class to pay for services primarily used by the lower classes - that's far simpler, less disruptive, and more efficient at settling the problem.

The problem with the minimum wage: it's a wage.

 

[billvon]

True in the short-term. But since it effectively devalues higher wages, it is a driver of inflation, which then causes a feedback loop in minimum wage hikes.

If done to excess - I agree. However, the minimum wave is currently not even keeping pace with inflation. If you raise it at the inflation rate (i.e. no real increase in pay) then that's not an issue. So we could raise it a fair amount (specifically, to about $9, which was the corrected minimum wage in 1968) before we run into that problem.

Considering that jobs paying minimum wage only exist because people volunteer to work them, there seems to be a demand for the current wage.

Sure. And if you lowered the minimum wage there would still be a demand for some of those jobs. That's not an argument that that level of minimum wage makes sense, though.

I didn't find anything about poverty in the FLSA.

?? Uh, OK.

 

[Vociferous]

The boosted wage helps the recipient more than the prices hurt. There's a net benefit, for them. We know this by arithmetic - they don't consume everything they produce.

Does the net benefit extend to everyone hurt by higher prices? Or just a warm, cuddly feeling?

Or deflation, maybe. Or nothing. Depends.

No, inflation. Where the money people earn today no longer buys as much as it did yesterday.

Live and learn.

Wow. Does everyone know about the upper class Cheetos?

Nobody can figure out how to do that. The simpler approach there is to tax the upper class to pay for services primarily used by the lower classes - that's far simpler, less disruptive, and more efficient at settling the problem.

The problem with the minimum wage: it's a wage.

Even simpler would be to allow the free market to determine wages.

If done to excess - I agree. However, the minimum wave is currently not even keeping pace with inflation. If you raise it at the inflation rate (i.e. no real increase in pay) then that's not an issue. So we could raise it a fair amount (specifically, to about $9, which was the corrected minimum wage in 1968) before we run into that problem.

Wouldn't any increase still raise the price of goods, and still set off the same feedback?

Sure. And if you lowered the minimum wage there would still be a demand for some of those jobs. That's not an argument that that level of minimum wage makes sense, though.

Really? People voluntarily willing to work for a wage doesn't make sense?
Sometimes I really wish I were more than a loud primate.

?? Uh, OK.

The Act that established minimum wage.

 

[Kittamaru]

Really? People voluntarily willing to work for a wage doesn't make sense?

Well, it depends on how you define "voluntarily"... for example, if someone has the choice between "dying of starvation" and "working a minimum wage job they hate", I think it's safe to say most rational human beings would take the minimum wage job...

Course, I'm sure you would just send them to a church to be taken care of, eh?

 

[iceaura]

Does the net benefit extend to everyone hurt by higher prices?

Not directly. They do get to live in a better, cleaner town, maybe pay less for police and fire and insurance and utilities, kids have healthier, better raised friends at school, that kind of thing.

No, inflation. Where the money people earn today no longer buys as much as it did yesterday.

That's one possibility. It depends.

Wow. Does everyone know about the upper class Cheetos?

It's the service - they are shipped from the source, stocked in the pantry, and kept on rotation so they are always fresh. So when you come up for the week at the second summer house, they are waiting for you.

Even simpler would be to allow the free market to determine wages.

Hard to set that up - especially if there is too much economic inequality to begin with, as in the US. The problem is that money keeps forever, but children need food every couple of days - it's what they call a "market distortion" in an introductory economics class.

 

[iceaura]

(specifically, to about $9, which was the corrected minimum wage in 1968)

Maybe 11 or 12. Recall Reagan's Social Security surcharge, the extra boost in the price of housing and medical above inflation, etc.