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To end any debate on what the minimum wage should be, first we must agree that we can optimize a minimum wage, meaning that the minimum wage will increase employment and economic consumption in the same way that a starving person once re-hydrated and re-fed can finally heal and get out of bed.
The US economy is retarded by too-low (artificially low) minimum wages, where the wage is artificially depressed by illegal immigration but allowed by law which allows lower than optimal wages.
http://www.princeton.edu/~davidlee/wp/lee-saez11optminwage_jpubeR2.pdf
Really dude! Your link is to a 34 page research paper, so my guess is nobody will read it. That said, my basic premis is that in a competitive labor market, there is no need for a minimum wage. If people are immigrating here because they make more money and raise their standard of living, and thus are depressing entry level wages, then you can control immigration to protect entry level wage earners. But it will raise cost to consumers, it has to.
The reality is that a very small number of people earn minimum wage, and most are young and single. The wages being depressed by illegals are not the minimum wage, it is the painters, drywallers et al, semi skilled tradesmen, so to speak.
To end any debate on what the minimum wage should be, first we must agree that we can optimize a minimum wage, meaning that the minimum wage will increase employment and economic consumption in the same way that a starving person once re-hydrated and re-fed can finally heal and get out of bed.
The US economy is retarded by too-low (artificially low) minimum wages, where the wage is artificially depressed by illegal immigration but allowed by law which allows lower than optimal wages.
http://www.princeton.edu/~davidlee/wp/lee-saez11optminwage_jpubeR2.pdf
When you pay an employee more than his or her productivity warrants you are retarding economic growth.
When you pay an employee more than his or her productivity warrants you are retarding economic growth.
What about if you pay an employee less than his or her productivity warrants, does that retard economic growth? And what determines what salary an employee's productivity warrants?
I'm not disagreeing with you, but I've seen this sentiment expressed quite a bit, yet rarely, if ever, see the opposite discussed. What are the effects of paying employees less than what their productivity warrants, which seems like what the minimum wage would be trying to prevent? By paying employees too little, do they end up with less spending money, putting less money into the economy, stifling growth?
I'm not trying to single you out for an answer, I just read your post and wanted to comment on the idea. The question is for anyone who opposes minimum wage, or minimum wage increases, because paying employees too much is bad for economic growth. What do you think about the other side of the coin, paying employees too little?
When you pay an employee more than his or her productivity warrants you are retarding economic growth.
What about if you pay an employee less than his or her productivity warrants, does that retard economic growth? And what determines what salary an employee's productivity warrants?
I'm not disagreeing with you, but I've seen this sentiment expressed quite a bit, yet rarely, if ever, see the opposite discussed. What are the effects of paying employees less than what their productivity warrants, which seems like what the minimum wage would be trying to prevent? By paying employees too little, do they end up with less spending money, putting less money into the economy, stifling growth?
I'm not trying to single you out for an answer, I just read your post and wanted to comment on the idea. The question is for anyone who opposes minimum wage, or minimum wage increases, because paying employees too much is bad for economic growth. What do you think about the other side of the coin, paying employees too little?
Fair question, I haven't seen any discussion anywhere about this side of the issue, mostly cuz people won't work for less than they are worth, at least not for long. They gain a little experience and then they're gone to a higher paying job where they're doing the same thing basically. So the employer saves money on labor costs in the short term but loses money on the hiring and training of new people in the long run, and businesses make decisions based on the long term as a rule. This was a problem for Henry Ford, about a 100 years ago; he was not able to keep a stable workforce paying low wages, so he upped the wages substantially and ended up with a much more stable work force and a much higher quality automobile. So, theoretically I'd say paying people too little relative to what they're worth or whatever the market value is for their services is a losing proposition, IOW probably retards economic growth maybe as much as an artificially high m-wage does. That's just my opinion though, I have not seen data about the impact of too-low wages.
The other issue you brought up, as did Spycraft is the idea that increasing the m-wage increases spending will inflate economic growth. As a separate factor, sure it does but the amount of growth you get is very miniscule and there are other considerations that offset whatever gain you get. Yes, there will be some winners but also some losers. First, the winners, you get a bigger paycheck but if it's too big then guess what? You could lose some state benefits that you don't qualify for any more. And maybe in return for that bigger paycheck you're going to lose some benefits, health care insurance, etc. Maybe you don't get that Christmas bonus any more or the pay raise isn't going to happen. Maybe now you gotta work harder too cuz you and the employees that remain have to do your work plus the work of the employees that are now gone. Somebody will be the losers in the m-wage hike you know.
Some people will work a fewer number of hours and some will lose their jobs altogether. Some jobs will be lost to automation, maybe the business cuts it's hours of operations or moves elsewhere or closes up outright. A lot of small businesses don't have much of a profit margin, making them pay higher wages may just be the last straw. If they can raise prices, fine but maybe that won't work out. In other cases the business stays afloat but any ideas of expansion are out the window, money flows to where it gets the best return, so not only do you lose existing jobs but also future jobs that will not be created.
The point is that there are a number of consequences to raising the m-wage, some are positive and others not so much. Many of the people who are advocating for a higher m-wage are unions and the like who do not work for m-wages themselves but their higher wages are ties to whatever the m-wage is. So if it goes up so does their contractual salary. And of course there's the politics of the issue.
When you pay an employee more than his or her productivity warrants you are retarding economic growth.
What about if you pay an employee less than his or her productivity warrants, does that retard economic growth? And what determines what salary an employee's productivity warrants?
I'm not disagreeing with you, but I've seen this sentiment expressed quite a bit, yet rarely, if ever, see the opposite discussed. What are the effects of paying employees less than what their productivity warrants, which seems like what the minimum wage would be trying to prevent? By paying employees too little, do they end up with less spending money, putting less money into the economy, stifling growth?
I'm not trying to single you out for an answer, I just read your post and wanted to comment on the idea. The question is for anyone who opposes minimum wage, or minimum wage increases, because paying employees too much is bad for economic growth. What do you think about the other side of the coin, paying employees too little?
Fair question, I haven't seen any discussion anywhere about this side of the issue, mostly cuz people won't work for less than they are worth, at least not for long. They gain a little experience and then they're gone to a higher paying job where they're doing the same thing basically. So the employer saves money on labor costs in the short term but loses money on the hiring and training of new people in the long run, and businesses make decisions based on the long term as a rule. This was a problem for Henry Ford, about a 100 years ago; he was not able to keep a stable workforce paying low wages, so he upped the wages substantially and ended up with a much more stable work force and a much higher quality automobile. So, theoretically I'd say paying people too little relative to what they're worth or whatever the market value is for their services is a losing proposition, IOW probably retards economic growth maybe as much as an artificially high m-wage does. That's just my opinion though, I have not seen data about the impact of too-low wages.
The other issue you brought up, as did Spycraft is the idea that increasing the m-wage increases spending will inflate economic growth. As a separate factor, sure it does but the amount of growth you get is very miniscule and there are other considerations that offset whatever gain you get. Yes, there will be some winners but also some losers. First, the winners, you get a bigger paycheck but if it's too big then guess what? You could lose some state benefits that you don't qualify for any more. And maybe in return for that bigger paycheck you're going to lose some benefits, health care insurance, etc. Maybe you don't get that Christmas bonus any more or the pay raise isn't going to happen. Maybe now you gotta work harder too cuz you and the employees that remain have to do your work plus the work of the employees that are now gone. Somebody will be the losers in the m-wage hike you know.
Some people will work a fewer number of hours and some will lose their jobs altogether. Some jobs will be lost to automation, maybe the business cuts it's hours of operations or moves elsewhere or closes up outright. A lot of small businesses don't have much of a profit margin, making them pay higher wages may just be the last straw. If they can raise prices, fine but maybe that won't work out. In other cases the business stays afloat but any ideas of expansion are out the window, money flows to where it gets the best return, so not only do you lose existing jobs but also future jobs that will not be created.
The point is that there are a number of consequences to raising the m-wage, some are positive and others not so much. Many of the people who are advocating for a higher m-wage are unions and the like who do not work for m-wages themselves but their higher wages are ties to whatever the m-wage is. So if it goes up so does their contractual salary. And of course there's the politics of the issue.
I appreciate the response. I'm very uncertain about minimum wage: while I think some sort of minimum wage may be important, I have no idea of the best way to implement it, nor what would constitute an optimum level for minimum wage in a given area. I wish there could be less partisan bickering on the topic and more reasoned discussion, and you certainly provided that in your post.
Personally, I think the gov't has better things to do than get involved with this decision.
ToddsterPatriot, I did not advocate the minimum rate should be increased to $17.50 per hour or any finite numbers of dollars per hour; I advocated the minimum be adjusted until it achieves 150% of its February 1, 1968 purchasing power.Each Thanksgiving day until the FMW rate attains 150% of its February 1, 1968 purchasing power,... I'm among the proponents for three economic proposals in particular:
(1) Each Labor Day, the federal minimum wage, (FMW) rate should be cost-of-living-adjusted, (COLA'd) by pegging it to a federal cost-price-index number. This method has been successfully retaining Social Security retirement benefits' purchasing powers.
(2) Each Thanksgiving day until the FMW rate attains 150% of its February 1, 1968 purchasing power, the rate should be increased by an additional 15%. The nation would have benefited if the minimum's purchasing power had been further increased since its peak value, rather than the significant decline we have experienced.
(3) Enact the trade policy described within Wikipedia's “Import Certificates” article. …
… These three proposals do not materially affect our annual federal budgets; Although, there are initial start-up costs necessary to enacting the self-funding Import Certificate policy.
They all contribute to increasing our median-wage which is critical to our middle income earning segment of our population.
The FMW rate effects upon jobs' wages are inversely related to the difference between the minimum's and the job's rate. Those earning the least, proportionally benefit more; those who earn more, proportionally benefit less, but all USA employees benefit from the federal minimum wage rate. ...
You want the minimum wage to be $17.50? What a perfectly terrible idea.
The nation would have benefited if the minimum's purchasing power had been further increased since its peak value,
How many people make minimum wage?
ToddsterPatriot, I did not advocate the minimum rate should be increased to $17.50 per hour or any finite numbers of dollars per hour; I advocated the minimum be adjusted until it achieves 150% of its February 1, 1968 purchasing power.Each Thanksgiving day until the FMW rate attains 150% of its February 1, 1968 purchasing power,... I'm among the proponents for three economic proposals in particular:
(1) Each Labor Day, the federal minimum wage, (FMW) rate should be cost-of-living-adjusted, (COLA'd) by pegging it to a federal cost-price-index number. This method has been successfully retaining Social Security retirement benefits' purchasing powers.
(2) Each Thanksgiving day until the FMW rate attains 150% of its February 1, 1968 purchasing power, the rate should be increased by an additional 15%. The nation would have benefited if the minimum's purchasing power had been further increased since its peak value, rather than the significant decline we have experienced.
(3) Enact the trade policy described within Wikipedia's “Import Certificates” article. …
… These three proposals do not materially affect our annual federal budgets; Although, there are initial start-up costs necessary to enacting the self-funding Import Certificate policy.
They all contribute to increasing our median-wage which is critical to our middle income earning segment of our population.
The FMW rate effects upon jobs' wages are inversely related to the difference between the minimum's and the job's rate. Those earning the least, proportionally benefit more; those who earn more, proportionally benefit less, but all USA employees benefit from the federal minimum wage rate. ...
You want the minimum wage to be $17.50? What a perfectly terrible idea.
The nation would have benefited if the minimum's purchasing power had been further increased since its peak value,
How many people make minimum wage?
I did not advocate a specific date for achieving the minimum's goal-rate; I advocated the minimum be annually increased by an additional 15% until the FMW rate attains 150% of its February 1, 1968 purchasing power.
How many employees earn precisely the minimum rate is not germane to consideration of that rate. The FMW rate more or less effectively affects all labor compensation in the USA.
Respectfully, Supposn
... I'm among the proponents for three economic proposals in particular:
(1) Each Labor Day, the federal minimum wage, (FMW) rate should be cost-of-living-adjusted, (COLA'd) by pegging it to a federal cost-price-index number. This method has been successfully retaining Social Security retirement benefits' purchasing powers.
(2) Each Thanksgiving day until the FMW rate attains 150% of its February 1, 1968 purchasing power, the rate should be increased by an additional 15%. The nation would have benefited if the minimum's purchasing power had been further increased since its peak value, rather than the significant decline we have experienced.
(3) Enact the trade policy described within Wikipedia's “Import Certificates” article. …
… These three proposals do not materially affect our annual federal budgets; Although, there are initial start-up costs necessary to enacting the self-funding Import Certificate policy.
They all contribute to increasing our median-wage which is critical to our middle income earning segment of our population.
The FMW rate effects upon jobs' wages are inversely related to the difference between the minimum's and the job's rate. Those earning the least, proportionally benefit more; those who earn more, proportionally benefit less, but all USA employees benefit from the federal minimum wage rate. ...
ToddsterPatriot, I did not advocate $17.50 per hour tomorrow; I advocated the minimum be increased 15 % annually until it achieves 150% of its February 1, 1968 purchasing power.You want the minimum wage to be $17.50? What a perfectly terrible idea. ...
... Which, today, is about $17.50.
I'm in favor of increasing the purchasing power for all USA wages which requires that the purchasing power of our median wage rate be increased, which is unlikely to occur if the purchasing power of the federal minimum wage rate is not also increased.… Among those paid by the hour, 870,000 workers earned exactly the prevailing federal minimum wage of $7.25 per hour. About 1.7 million had wages below the federal minimum. Together, these 2.6 million workers with wages at or below the federal minimum made up 3.3 percent of all hourly paid workers. ...
...You're in favor of this because 870,000 low and unskilled workers are making minimum wage?
... I'm among the proponents for three economic proposals in particular:
(1) Each Labor Day, the federal minimum wage, (FMW) rate should be cost-of-living-adjusted, (COLA'd) by pegging it to a federal cost-price-index number. This method has been successfully retaining Social Security retirement benefits' purchasing powers.
(2) Each Thanksgiving day until the FMW rate attains 150% of its February 1, 1968 purchasing power, the rate should be increased by an additional 15%. The nation would have benefited if the minimum's purchasing power had been further increased since its peak value, rather than the significant decline we have experienced.
(3) Enact the trade policy described within Wikipedia's “Import Certificates” article. …
… These three proposals do not materially affect our annual federal budgets; Although, there are initial start-up costs necessary to enacting the self-funding Import Certificate policy.
They all contribute to increasing our median-wage which is critical to our middle income earning segment of our population.
The FMW rate effects upon jobs' wages are inversely related to the difference between the minimum's and the job's rate. Those earning the least, proportionally benefit more; those who earn more, proportionally benefit less, but all USA employees benefit from the federal minimum wage rate. ...ToddsterPatriot, I did not advocate $17.50 per hour tomorrow; I advocated the minimum be increased 15 % annually until it achieves 150% of its February 1, 1968 purchasing power.You want the minimum wage to be $17.50? What a perfectly terrible idea. ...
... Which, today, is about $17.50.
I'm in favor of increasing the purchasing power for all USA wages which requires that the purchasing power of our median wage rate be increased, which is unlikely to occur if the purchasing power of the federal minimum wage rate is not also increased.… Among those paid by the hour, 870,000 workers earned exactly the prevailing federal minimum wage of $7.25 per hour. About 1.7 million had wages below the federal minimum. Together, these 2.6 million workers with wages at or below the federal minimum made up 3.3 percent of all hourly paid workers. ...
...You're in favor of this because 870,000 low and unskilled workers are making minimum wage?
Respectfully, Supposn
The quickest way to increase the wages of low skilled and unskilled workers is to stop allowing millions of low skilled and unskilled illegal aliens from coming across the border annually.
The quickest way to increase the wages of low skilled and unskilled workers is to stop allowing millions of low skilled and unskilled illegal aliens from coming across the border annually.
So if there were a group of 20 people stranded on an island and only enough water for 15 of them, your solution would be to get rid of 5 people rather than all 20 looking for more water.
That's essentially what you are saying when you say that because the extra immigrants don't create a situation where there is so much labor in the economy that people can't purchase what they produce, it's a question of their not being enough money in the hands of enough people which is what ensuring that wages are higher at the bottom is all about. Raise wages (responsibly) and the problem solved itself. At least until we run out of real resources to use to make the kinds of things that people need and want.
The optimum is $0 per hour.
The quickest way to increase the wages of low skilled and unskilled workers is to stop allowing millions of low skilled and unskilled illegal aliens from coming across the border annually.
So if there were a group of 20 people stranded on an island and only enough water for 15 of them, your solution would be to get rid of 5 people rather than all 20 looking for more water.
That's essentially what you are saying when you say that because the extra immigrants don't create a situation where there is so much labor in the economy that people can't purchase what they produce, it's a question of their not being enough money in the hands of enough people which is what ensuring that wages are higher at the bottom is all about. Raise wages (responsibly) and the problem solved itself. At least until we run out of real resources to use to make the kinds of things that people need and want.
So if there were a group of 20 people stranded on an island and only enough water for 15 of them, your solution would be to get rid of 5 people rather than all 20 looking for more water.
Your solution would be to mandate more water into existence.
The quickest way to increase the wages of low skilled and unskilled workers is to stop allowing millions of low skilled and unskilled illegal aliens from coming across the border annually.
So if there were a group of 20 people stranded on an island and only enough water for 15 of them, your solution would be to get rid of 5 people rather than all 20 looking for more water.
That's essentially what you are saying when you say that because the extra immigrants don't create a situation where there is so much labor in the economy that people can't purchase what they produce, it's a question of their not being enough money in the hands of enough people which is what ensuring that wages are higher at the bottom is all about. Raise wages (responsibly) and the problem solved itself. At least until we run out of real resources to use to make the kinds of things that people need and want.
So if there were a group of 20 people stranded on an island and only enough water for 15 of them, your solution would be to get rid of 5 people rather than all 20 looking for more water.
Your solution would be to mandate more water into existence.
I gave you my solution already, I'm surprised you missed it. Create more water via the use of labor and raw materials. It's not until the raw materials needed to create goods and services runs out (or it stops raining, though in fairness rain is just a metaphor for all G&S) that there is a problem.
]I'm in favor of increasing the purchasing power for all USA wages
liberals pray for this day to come so they can take over the economy to allocate scarce resources at gun point as they see fit. Fortunately, 1000's of years have passed and population has gone from 0 to 7 billion but, oddly, we have more resources than ever. Please hold your breath waiting for our scarce resources to run out!!It's not until the raw materials needed to create goods and services runs out (or it stops raining, though in fairness rain is just a metaphor for all G&S) that there is a problem.
The optimum is $0 per hour.
It might seem optimal for an employer to pay nothing, but if the employer's customers are the same people that make stuff for companies to sell than $0 can't be optimum as no one will have the money to buy the things they are employed to create.
