Spare_change
Gold Member
- Jun 27, 2011
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Out of the goodness of your heart, you might choose to pay your employees more if the government didn't subsidize their needs, but I believe most employers would pay wages based on supply and demand in the labor market.Don't you realize we are all subsidizing low wages now, Medicaid, Welfare, Food Stamps, and other social programs.No, that's not what I said and your interpretation is completely illogical. If America reduced spending on social programs that would certainly not force businesses to pay higher wages. However, if employers pay higher wages to low income earners, we won't need the level social programs we have today.of course thats idiotic and liberal. If America reduced what it spends on social programs business would have to pay higher wages!! Liberals are 100% stupid. They see how capitalism quadrupled income in China and want America to use socialism even after it slowly starved 60 million death
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The problem is how do we get higher wages for about 25% of the population. Thanks to globalization and free trade, American workers are in competition with workers in nations whose wages are a fraction of US wages.
As long as you subsidize the low wages I pay, I have no incentive to raise the wage level. Only when the worker demands more, and I can't find others who will do it for less, will the average wage increase.
I agree that increasing the demand for workers is the only real viable solution. Probably the best way to do this is with large infrastructure spending that will reduce the slack in the labor pool. Unlike much government spending, infrastructure spending makes America more productive so there is real economic payback..
However, infrastructure spending is only a temporary solution. The basic problem remains. The entry of China, India and the former Soviet Union into the global economy has double the size of the global workforce. Most of these workers have wages in the range of $2 to $5/hr which makes it very difficult for low income earners in the US.
Over the long term, two things must happen to narrow the US wage gap. First, wages must increase in other nations such as China and India. This is happening but it will take many years for the wages in these countries to reach the level of the US worker. Secondly, US low end workers must become more productive to warrant higher pay. That means giving workers the tools they need to become more productive.
As a business owner, I thank each and every one of you for subsidizing my labor costs. But, you get yours in return ... lower prices.
If we increase the minimum wage, or more appropriately, increase the wages of the bottom 10%, the resulting ripple will be felt in middle class homes. If I have to pay more for labor, I will pass that extra cost on to the consumer by raising product prices.
If I raise product prices, the middle class will be faced with two choices: 1) quit buying the product, or 2) pay a larger percentage of your income for the product. Since it is unrealistic to think that people are going to quit eating, or living, eliminating a product from the market is unreasonable. You can,however, expect that people will pay the larger price.
The middle class then will, of course, demand an increase in wages in order to offset the increase in cost of living. Increasing income of the middle class will then result in even higher prices - which means the lower class will need another increase in wages in order to offset the increase in prices.
And, so the cycle goes on ....
The answer is not to increase their wages, but give them opportunity, and the incentive, to increase their position in the job market thru education.
Infrastructure maintenance and upgrade is ballyhooed as being the solution - but, in reality, it would exacerbate the problem, not fix it. Nobody questions that the infrastructure needs to be upgraded. It is almost criminal the way it has been ignored. But, to claim it as a panacea for the poor is simplistic and shortsighted.
Infrastructure upgrade is done with tax dollars - tax dollars that would have to be taken from other programs. Which government programs do you propose we eliminate? The alternatives to that --- borrow the money or increase taxes.
'Increase taxes' seems to be the easiest and most politically acceptable - after all, the majority of people would not be affected (or minimally), and the load would be carried by the top 30% of income earners. However, we need to keep in mind that, of every dollar we remove from the economy, 38% of it goes to operating/maintaining the government oversight. So, only 62% ends up at the production level. In addition, there is the unequal penalty of tax increases - why should one person who drives over a bridge pay $500 a year for the bridge, while the person in the car behind them pays nothing? The concept violates the very essence of our country.
We also need to be aware that every dollar removed from the economy, through increased taxation, is one less dollar that can be used to increase the need for labor. So, we produce less jobs because we have to pay more taxes, and when we pay more taxes, only 68% is used to create jobs.
Clearly, a downward spiral ....
What you're saying is raising the minimum wage will increase inflation. Well, yes and no. It isn't always necessary for companies to push the expenses of a higher-paid workforce onto consumers. Raising the minimum wage can create a temporary or artificial bump in the inflation rate, but so can increases in corporate taxes or a shortage of raw materials.
The presidents proposal is to raise minimum wage $1.75 or about 23%. However this does not mean inflation will increase 23% or anything even close to that figure. The reason for this is wage scales do not increase uniformly. A company whose lowest paid employee is making $11 does not necessary make any change to their wage scales. When faced with an increase in labor cost, businesses do not necessarily raise prices. Some business will just absorb the cost, others will layoff marginal workers, cut other expenses, or some combination of cost saving and revenue increases..
In previous minimum wage increase, it has been very difficult for economist to identify any inflationary impact.
A major Infrastructure improvement program would last for years creating a demand for low income workers plus it would provide stimulus to the economy for a number of years. Over the long term, it will make the nation more productive. A better faster highway and rail system will bring goods to market faster, and improve worker productivity.
First of all, a corporation does not have "the goodness of your heart". It exists for one singular purpose - to maximize the profits for those who own it. Nothing more - nothing less. Can you imagine the reaction if I were to stand up in front of the next stockholders' meeting and announce that, normally, you would have received $11.55 per share dividends this year, but because I felt the workers needed better wages, you will not receive any dividend, and for those of you representing mutual funds, 401(k)s, etc., you need to go to your consumers and tell them you lost money for them this year? Oh, by the way, all those retired people depending on my stock to fund their retirement program will have to go hungry next year.
You are, of course, right that there is not a linear actual increase in wages up the pay scale - in fact, it's much more damaging than that. If a corporation were to increase its unskilled labor wage base by 10%, that percentage tends to stay the same - though, not necessarily, equal - but the ramifications are amazing. For example, I increase the unskilled labor base by 23% (your number), it is inconceivable that I won't have to increase all the other labor rates. While it won't be 23%, it will be 12% or 10% or 8%. 8% of an engineer's salary (assume 80K) is significantly more damaging. It is not a linear scale - it is an exponential scale that will devastate the corporation's competitive position. THAT is how the market gets inflated.
People look at the minimum wage law in a tunnel - they consider the impact on the labor base, and nothing else. They need to,instead, look at the unintended consequences of such an action.
The problem isn't a low minimum wage. Minimum wage jobs are intended to be for those entering the job market with no marketable skills - teenagers, etc. I think I can say, probably without exception, that there are no minimum wage jobs that require you to bring skills to the table - instead, those jobs are the ones that you get paid while you learn marketable skills.
The problem is that there is a segment of our labor pool that have no skills, but yet have families to raise. I'm sure we have all noticed that the average age of the fast food worker has increased significantly over the past two decades. Adults and seniors are taking positions originally intended for teenagers, and those positions were never intended to be lifestyle support.
Companies pay for skills - if you don't have them, you don't get hired. Then, you are forced to go to minimum skilled positions - which pay minimum wage.
There was a recent article in the paper about trying to live on minimum wage. To prove how bad it is, they interviewed a fast food worker in Los Angeles. She said that she had been working at McDonald's, and her pay had only increased to $9.35/hour. She was a single mother trying to raise three kids. Pretty tough deal - no doubt. But, she said this through an interpreter. She had come from Mexico, found a job at McDonalds, and had worked there for six years.
You have to sympathize with her - until you realize that she has no other marketable skills. She has made no attempt to upgrade her marketability. In six years, she hasn't even bothered to learn to speak English!! Is it McDonalds' fault she only makes $9.35, or is it hers? Why would you ask McDonalds so subsidize her?