Economics 101: Raise Minimum Wage and Jobs Decrease

Originally posted by grover
He's a child, he doesn't know what the hell he is talking about. Lets hope he has a comfy existence so that he is not confronted by reality...he won't be able to handle it.

Yet another instance of Grover attacking the person and not the issue. By the way Grover, I have taken the initiative to not work a minimum wage job and am pursuing an MBA at the age of 21. How about them apples? Rather than stay in my family's history of only one level of college or working skilled labor, I have pursued a position higher, one which anyone who has the skills can attain. The key is effort.

Originally posted by CAConrad0825
@ StellarX

The US labor market has suffered during the years of higher minimum wage increases.

It has suffered for the last three decades and if you can find the trend you seem to be suggesting I'll be most surprised.

The higher the wage the less an employer is willing to hire in that country.

That is not really the case as employers still need skilled labour and in countries where people actually have rights and freedoms skilled labour can protect themselves from being ripped off by industry. Where will you find that 'cheaper' labour if the laws of your host country does not allow you to base your production facilities in other countries?

The EU is finding this out the hard way but because of unions and labor legislation,

The EU is always opening up their economies to cheap ( shock&horror ) educated labour from Eastern and central Europe to say nothing of SEA. European workers are not finding this out the 'hard way' as they knew it all along but failed to prevent their governments from opening up and destroying the trade barriers that protected local labour. Stop blaming the unions as the Unions in most cases DO represent the people; the stronger the unions the better living conditions and wages in that given country.

they have become used to having 1/3 of the year off and compensation for being laid for years after the fact.

And what's wrong with that if it can be made to work without ripping off other countries while protecting local industry and labour? Why should i have to compete with sweat shop labour in Indonesia or Thailand? What use is my government if it refuses ( it's not like people want to compete with people who basically slowly starve to death) to protect me from that by creating tariffs that will be employed to make local industry more productive without robbing the workers blind?

The lobbyists pushing the min wage legislation are not those representing the common worker or their benevolent democratic representatives,

Yes they are and i am surprised you will go to such lengths to deny reality...

but labor unions.

Which is organized resistance to industry however bad name it got from Hollywood.

Unionists have labor contracts, their wage is set for years ahead and they have job security.

Years ahead? Maybe if you work for a defense contractor ( thus feeding from the taxpayer trough) but the rest of industry can hardly afford such lunacy.

Other workers are judged by the performance. A higher minimum wage means less scabs to take the place of unionists when their demands are not met and they go on strike.

Another common misconception ( lie spread by the media) is that average humans want something for nothing and that workers will always just want more reward for doing less. People strike because they think the deserve a greater cut of the profits those who sit in offices seem to think they can appropriate for themselves. Strikes normally happen when a given company has been ignoring it's workers demands for a long time while raking in the profits and simply not sharing. Just go look at what the average worker will do when his company is doing badly ( pay cuts or whatever) and you will soon realise which group is being irrationally greedy.

Higher Wages = Less Labor Budget, companies have overhead budgeting

For a higher wage you can normally attract better educated workers or insist on greater performance so it's not a zero sum game where the paymasters always lose. The local telecom company in South-Africa have been laying off tens of thousands of people over the last few years and while it never had serious financial difficulties they sure are raking in the cash now. The whole point of layoffs is not that there is no money but that you retain the hardest workers and use the threat of layoff's to get two people's worth of labour from them.

...by increasing the rate the money has to come from somewhere, either raising prices or lowering labor compensation in terms of workers employed.

Inflation is what happens when the government prints more money than there is goods to buy ( Bill Gates may be worth 234324334 billion dollars but he can only buy so many cars and eat so many happy meals. Inflation is not something that is caused by the average person receiving a higher wage ( they are very likely to buy actual goods which will stimulate demand thus resulting in sustained economic expansion) but something that results from the US government printing trillions of dollars that goes into corporate pockets, to foreign dictators, to defense contractors who employ the same cheap labour but have monopolies so can ask whatever they like for the finished product and generally land up in hands that will not stimulate the exchange of goods.

Inflation is robbery by the rich of the poor as they can still buy buy a new car the money that is now worth half as much while your now taking the bus they probably own.

Don't be fooled and keep agitating for higher wages as higher wages must stimulate demand if the newly printed money is actually going to the average worker. In the worse case scenario people will be able to afford what they require and will start saving again at which point the government can once again start reigning in the cash supply to prevent old fashioned ( the real type) from becoming a problem.

Stellar

Originally posted by jsobecky
There is an element of the labor market that is not taught or accounted for in the schools: the effects of illegal immigration.

And why would they teach that? Illegal immigration on any significant economic scale is not something that can take place unless a government is hopelessly incompetent ( VERY unlikely) , can not prevent it due to blackmail by some foreign power or chooses to do so so as to ensure a more compliant labour force that can not exercises their freedom to demand better for lack of protection from those who do not have the luxury of wanting more than a hot meal by the end of the day.

If you want to reign in people's freedoms it's best to start hitting them where it hurts most and that is their means of income and thus survival.

They are the ones who work at minimum wage jobs. This drives up the price of all manual labor. Why do you think that labor unions endorse raising the minimum wage?

The labour unions endorses raising the minimum wage because it makes sense and leads to higher purchasing power for individual workers if that currency is being managed for the good of the country.

Stellar

Originally posted by CAConrad0825

Originally posted by grover
He's a child, he doesn't know what the hell he is talking about. Lets hope he has a comfy existence so that he is not confronted by reality...he won't be able to handle it.

Yet another instance of Grover attacking the person and not the issue. By the way Grover, I have taken the initiative to not work a minimum wage job and am pursuing an MBA at the age of 21. How about them apples? Rather than stay in my family's history of only one level of college or working skilled labor, I have pursued a position higher, one which anyone who has the skills can attain. The key is effort.

thats nice. You still don't know what you are talking about. 21 year olds rarely do. Its a matter of blood and guts experince.

Originally posted by df1
The north didn't really give a damn about abolition, they were more concerned that the southern states were intent on building factories that would use slave labor that was not paid a minimum wage. This would have resulted in the northern factories owned by the-powers-that-be of the day being unable to compete, because the northern factory workers still needed to be paid some defacto minimum wage.

Uh, we're talking about the USA here, not Fantasy Island.

The North had far surpassed the South in terms of mechanization and efficiency. That's the reason they won the war.

The South wanted to make slavery a states rights question, and also wanted to secede from the Union. In fact, eleven of them did secede.

Can't have that, and still be called the United States of America, now can we?

Originally posted by CAConrad0825
I can answer your argument in one sentence. If your job does not pay you enough to live decently, stop working there.

Do you live in the real world?

Many of these people who are paid; Minimum wage are students and the un-educated. Many of them can't get better jobs or are trying to through the education process. However, they can also be rail-roaded into working in the area (without a job you can't get a car and so on and so fourth) so they have no choice.

Let me explain it like this, for 39million a year out of the 2000 million you make, you could make everyones life better. How is that a hard thing to do? In fact, why not give them nearer to £3 more an hour. If you raise the working standards, pay them more, etc, you will get more from them.

He's 21 and a student.... that should answer your question Odium.

No one has refuted the point that the higher the required wage the lower amount of jobs available. The money has to come from somewhere. We live in a nation where you are paid on your ability, not effort or need. Get over it. And Grover, stop posting until you have something constructive to say other than you are old and senile.

Also as a student worker, I work the jobs you claim are so awful.

[edit on 14-2-2007 by CAConrad0825]

The BIG republican lie is that there simply is not enough money to go around for social services, wage increases etc. Just look at the military budget proves that lie wrong.

then fix that issue, and address the current one.

Yes and the money can come from two places.

Either the amount of people you employ or yourself. The easier way and the smarter way to do it is to reduce your own income. Nobody needs to have more than £1 billion pounds or even $1 billion USD. I am sorry, but there's no logical arguement that can believe it is fair for people to starve, for the elderly to die of the cold in winter so you can own your own island.

I earn a lot of money mate and I used to work the jobs you do now. I hope one day, you might start to put money aside and give money away. You don't need two houses, three houses, ten houses. You don't need twenty cars. But what we do need is people to start to care about one another in society, that's how it will grow. That's how crime will drop.

By pursuing your own self interest and purchasing those good you pay people. When you give money through the government you teach them nothing but slacking equals assistance.

Originally posted by CAConrad0825
By pursuing your own self interest and purchasing those good you pay people. When you give money through the government you teach them nothing but slacking equals assistance.

That's rather the lie.

Sorry but I work with criminals, I work with them every day of my life. The vast majority of people who steal do not live off of the state, they actually do not get benefits. It is why they steal. :-)

Originally posted by Odium
I earn a lot of money mate and I used to work the jobs you do now. I hope one day, you might start to put money aside and give money away.

Do you receive tax credits for you donations? Or do you receive happiness? Either way you profit from your altruism. Its not total charity if you receive a profit in return, which even feeling good about what you are doing is a profit. The big picture is that money is not the only way to receive utility. Even in a barter system you would have poor people. Its market inefficiencies because people have to adapt to the markets. I wonder if animals share your socialist views?

Originally posted by CAConrad0825
Do you receive tax credits for you donations? Or do you receive happiness? Either way you profit from your altruism. Its not total charity if you receive a profit in return, which even feeling good about what you are doing is a profit. The big picture is that money is not the only way to receive utility. Even in a barter system you would have poor people. Its market inefficiencies because people have to adapt to the markets. I wonder if animals share your socialist views?

I do agree people who do a better/more important job should get more. But I can not agree, someone who is born should earn £1 million a day because of who his father was. You talk about people making as much as they're worth and yet all that person is worth is his name.

As for the charity I give too, it is a home-less Charity for people under 25. It buys houses and as long as they are in education and they are shown to improve their position (keep up the grades, etc) than they are allowed to live for free there. I do not get tax back from it and I pay the highest level of taxation in my country. I do not deny that the way the government works is flawed - it just doesn't have to be flawed.

Originally posted by CAConrad0825
The money has to come from somewhere.

At the beginning of this thread my comments on the money supply were deemed off topic and disregarded. And now you want to use our ignorance of where the money comes from to support your opposition to the minimum wage. The fiat dollar of the US government is made out of the wholecloth with no value other than what the US government says it's worth. And we have no clue how many total US dollars are in circulation.

The cause and effect between an increased minimum wage, inflation and production costs that has been presented by numerous posters is quite logical, but it is voodoo economics if we don't know how much money is in circulation. Without these numbers any calculation of the inflation rate is completely bogus, as is any argument using inflation as a basis to oppose the minimum wage.

Indeed, where does our money come from? And much money is in circulation?

[edit on 14-2-2007 by df1]

Originally posted by StellarX

Originally posted by jsobecky
There is an element of the labor market that is not taught or accounted for in the schools: the effects of illegal immigration.

And why would they teach that? Illegal immigration on any significant economic scale is not something that can take place unless a government is hopelessly incompetent ( VERY unlikely) , can not prevent it due to blackmail by some foreign power or chooses to do so so as to ensure a more compliant labour force that can not exercises their freedom to demand better for lack of protection from those who do not have the luxury of wanting more than a hot meal by the end of the day.

They won't teach it because it goes against their liberal philosophy. They would have to justify border protection, which most (liberal) professors are against.

They are the ones who work at minimum wage jobs. This drives up the price of all manual labor. Why do you think that labor unions endorse raising the minimum wage?

The labour unions endorses raising the minimum wage because it makes sense and leads to higher purchasing power for individual workers if that currency is being managed for the good of the country.

Stellar

No they don't. They endorse it because it gives them another reason to argue for higher wages which are not accompanied by higher productivity.

And "higher purchasing power" is an illusion, used to sell the idea of forced wages. Nobody ever mentions the accompanying higher prices that go along with artificially high wages. That leads to....Inflation.


And please expand your "good of the country" argument. I would like to hear it fleshed out.

market forces and job demand drive wages not an artifiicaly created wage. In high cost areas like the SF Bay Area, they guy making the latte at Starbucks gets $13.00 an hour. In say North Dakota, I would expect him or her to make alot less. Its market dynamics.

Increasing the wages can hurt the biggest employers out there small businesses. They have less margin and less capital to absorb such costs thus stunting job growth. A fewer may benifit, but more may be shut out as expansion and growth is curtailed.

Originally posted by CAConrad0825

Obviously you have not had much experience with unions. The things that you claim unionist cannot do, they do all the time. To fire a unionist risks a full strike, as well as you have to pay them outrageous compensation for the time in which YOU cannot find them a new job. The unionist crowd out the labor force of non unionists and decrease the wages allowed for nonunion workers. Foreign automakers like Honda however have set a trend of high paid non-union labor, and still make great profits.

To say that a required wage helps the economy is bunk. A true free trade of a labor market is the only true way to achieve economic growth.

I do have experience with unions ... having been employed in a union job for over 9 years. That being said we don't have the right to strike at any time for very valid reasons ... our union signs a "non-strike clause" and when we have an impasse or our negotiations are lagging the old contract is always fully in effect to continue to validity of the non-strike clause.

That also being said .. I have seen a few union employees fired for deriliction of duty of not being able to perform to expected standards. Yes, it took quite a bit of paperwork and they were able to unsuccessfully appeal the matter. I don't see the issue with requiring an employer to prove you aren't able to perform to the job and document it all. After all if they expect me to show up day after day, year after year then what is wrong with expecting the employer to be consistent as well.

Granted my experience with unions is in the public sector ... so it might be a more unique view of a union.

My experience is with people in the private sector, specifically in the companies of GM and GE. Numerous instances of loafing on the job being tolerated because of strike threat and job contracts have left a bad taste in my mouth, as well as the progress made by non unionized companies as compared to their unionized counterparts.