Your Opinion -- Minimum Wage

Hello everyone. This thread is for you to sound off on your opinions. Despite what the majority of FireSociety members believe about certain issues, here you are free to speak your mind. If this goes well, I may post a new installment every week on different topics.

 ------------------------------------------------------------------------------------------------

Rules of this thread:

1. All opinions must be backed with reasoning.

2. No flaming.

3. No resorting to childish remarks such as name calling.

4. No writing in all CAPS, bold, or non-standard text sizes.

5. >>>>>Read everything before posting!<<<<< 

------------------------------------------------------------------------------------------------

I have provided the following pros and cons found on balacedpolitics.org:

 

Should the minimum wage be abolished (i.e. reduced to $0.00)?

 In a nutshell.....

----------YES----------

1. The vast majority of economists believe the minimum wage law costs the economy thousands of jobs.
2. Teenagers, workers in training, college students, interns, and part-time workers all have their options and opportunities limited by the minimum wage.
3. A low-paying job remains an entry point for those with few marketable skills.
4. Abolishing the minimum wage will allow businesses to achieve greater efficiency and lower prices.
5. When you force American companies to pay a certain wage, you increase the likelihood that those companies will outsource jobs to foreign workers, where labor is much cheaper.
6. Non-profit charitable organizations are hurt by the minimum wage.
7. The minimum wage can drive some small companies out of business.
8. A minimum wage gives businesses an additional incentive to mechanize duties previously held by humans.
9. Cost-of-living differences in various areas of the country make a universal minimum wage difficult to set.
10. The minimum wage creates a competitive advantage for foreign companies, providing yet another obstacle in the ability of American companies to compete globally.
11. The minimum wage law is just another example of government condescendingly controlling our actions and destroying personal choice. Citizens do have the ability to say no to a lower wage.

----------NO----------

1. Adults who currently work for minimum wage are likely to lose jobs to teenagers who will work for much less.
2. Workers need a minimum amount of income from their work to survive and pay the bills.
3. Businesses have more power to abuse the labor market.
4. It forces businesses to share some of the vast wealth with the people that help produce it.

------------------------------------------------------------------------------------------------

Please go here and read background informationas well as an explaination for each pro and con listed above. If the link does not work, copy and paste the following url. http://www.balancedpolitics.org/minim...

------------------------------------------------------------------------------------------------

My Opinion

Given that everyone has the opportunity to voice thier own opinion regardless of majority tyranny, it would be ludicrious for me to not participate in my own discussion thread. So here it is.

 

I think that although a minimum wage manipulates the free market and negatively affects both consumer surplus and producer surplus, a minimum wage must exist in this country because this is America and we have standards. However, the Federal minimum wage should be abolished because it is inefficient due to the fact that different states have different standards of living. The responsibility of the minimum wage should rest entirely on the individual states, many of which already have their own minimum wage laws.

------------------------------------------------------------------------------------------------

POST AWAY!

---

Most adults working for minimum wage are either very unskilled or looking for supplemental income or unwilling to do what is required to get a higher paying job.  Are there really any career paths that end with a minimum wage job?  Teenagers don't willingly work for less.  They are willing to work for less only when it is their best alternative.  Teens are the most likely to have a lack of experience and training to do a job and therefore aren't as valuable as an employee.  Furthermore, they are going to be gone as soon as they finish school or gain enough experience to move up the ladder.  Some 40 year old still working at minimum wage for the past 25 years shows little prospect for improving himself.  Most people hear statistics on minimum wage earners and imagine it is somebody stuck in the position for life.  However, it is known that most people will work only a short time in a minimum wage job and will eventually move into a higher income bracket.  That is the part that doesn't get mentioned by libs who support minimum wage.  Instead, they would like to enable and therefore institutionalize the minimum wage underclass. 

There are many people who get by on less than minimum wage, and not just bums huddling under an overpass or selling flowers on the street corner.  It is possible to live simpler and avoid many bills.  Even the poorest today have so many things that weren't even available at any price in the 1930s and we simply have no firsthand feel for what real poverty and deprivation is in this country.  Look back to the Great Depression or to the poverty stricken of the world in places like Africa.

If businesses could really abuse the labor market, don't you think they would pay less for the high paying jobs like professional sports player or entertainer or corporate manager?  Employers pay for results and face the same competition for labor as for raw materials, energy, and other inputs to their business.

Anybody is free to save, invest, and start their own company or buy part or all of an existing company.  When you own something, you can decide whether and how to share the wealth.  Just because somebody contracts to work for you for defined compensation, it does not give them a claim on your wealth.  They could negotiate for a percentage of profits in lieu of fixed wages.  It isn't unheard of for people, (ironically usually those not covered by some kind of collective bargaining) to receive compensation in the form of stock or stock options in lieu of salary and wages.  It gives them a lot more motivation to make the company successful.  Some employment situations would be simply to risky for anybody to accept those kind of terms.

Walter Williams and others have written extensively on this issue.  From a column by Richard McKenzie:

Opponents of minimum-wage hikes (for example, Gary Becker and Richard Posner writing for the Wall Street Journal, January 26) will magnify as best they can the employment effects of any mandated wage hike, not realizing that the available findings of little to no employment effects from modest minimum-wage increases actually support their more fundamental position, that government should not try to tamper with Mother Nature—or competitive market forces.

Menial workers are paid little not so much because of employer greed as because of their low productivity and competitive pressures in both their own labor markets and their employers’ product markets. Those competitive pressures do not subside when the minimum wage is increased. If the wage hike gives rise, initially, to more workers looking for jobs than there are jobs available (as both sides agree will happen), employers can respond simply by taking away fringe benefits and increasing work demands, thus largely reducing, if almost negating, the cost effects of the mandated money-wage increase. (This explains the minimal measured effects of any minimum-wage hike.) A number of research studies support such an outcome:

Quantifying the Harm

With the money-wage hike and the reduced benefits, workers can be left worse off since the fringes and slack work demands taken away were provided in the first place because workers valued them more highly than the wages forgone for those benefits. Given the findings of his own as well as other researchers’ studies, Wessels deduces that every 10 percent increase in the hourly minimum wage will make workers 2 percent worse off. This means that the enacted $2.10, or 39 percent, minimum-wage increase presumably can be expected to leave affected workers 8 percent worse off in terms of their overall “payment bundle” (including the money and nonmoney benefits of employment).

Employers facing strong competition will be forced to cut out workplace advantages to neutralize as much as they can (but not totally) the imposed money-wage cost increase. That will be necessary just to avoid losing market position to those employers who respond to competitive pressures by cutting out the costly extras. The workers whose jobs are most at jeopardy from any minimum-wage hike will be that small group of (truly desperate) workers whose only form of compensation is their money wages and who are working as hard as humanly possible.

The sad outcome from any minimum-wage hike is that both employers’ and employees’ welfare will be undercut. The better news is that the forces of market competition will ensure that the damage done by politicians will be smaller than critics of minimum-wage hikes have heretofore recognized.

Congress and the President, are doing of course, what is politically expedient. In the process they have once again failed to heed a lesson that many market-oriented economists have always taught indirectly, if not directly, in their writings: You can’t fool Mother Nature, and there is little constructive point in trying to fool competitive markets, even with the best of intentions.

---

Simply stated Yes. Just taking into consideration of the costs of basic needed items, i.e, food, clothing, and shelter, and I'll add in energy. There HAS to be a standard that is across the board. I've recently relocated to Az. from Texas. Not much is really too different price ways except that it is slightly 3-5% in my observation more costly to live in Az., and I'm sure that's even way higher in California. Should you extrapolate living costs lets say using a sugar soda for the base. In 1960 one could buy a soda from a vending machine for .05 cents. Minimum wage then was I believe $1.25. That same soda from a vending machine is now $1.00+ or minus. .05 cents then was 1/25th. of the minimum wage, whereas today $1.00 is 1/5th. of minimum wage. I cannot help but think of these so called energy drinks here, that are basically a soda with a few viatmins added in, and they charge way over the top prices for them. Plug in other items into what I;m saying or even utilities and the same holds true or fairly close. Also, while watching American Idle last season it was brought to my attention when they do their charity show, that for $1.00 an entire table load of food and milk, and sundry items can be purchased, and they showed a huge wherehouse of these goods. What really brought it to my attention was Simon's apparent incredulity to this fact. This tells me that we're all over paying by hugh sums what really needs to be charged. Yes, I know much of what is there is donated, but even so it's then a tax shelter. It's the old adage, whatever the market will bear. Therefore, YES!, minimum wage needs to be in line and Federally controlled to offset greed. There are many retired and elderly Americans that live solely on their Soc. Sec., which I'm sure is well below minimum wage. Not only do they need f., c., and shelter but I'm sure medications, which notably has stripped many down to a dog food existence. Of course minimum wage increases will also propel the need for greed increase. So, wherein does the solution truly reside? Socialism is not the answer either.

OTOH, you could buy an LP album for $7-$10 and a 45 for a buck or so, as I recall.  Today, you can buy a CD for $10-15 or download a song for a buck. 

Soc Sec was never intended as anything but a supplement.  People today are getting more soc sec than ever, because they are living longer.  But the real problem, besides demographics, is inflation.  Inflation is due to the Fed printing unbacked money, and that is a different problem.  Inflation is an insidious thief that disproportionately affects people who lend and people with fixed incomes.  At least people who lend their money can account for inflation with a higher interest rate.  Fixed income retirees are pretty much dependent on the government granting COLAs.

---

Using the best reasoning available to me, I vote an absolutely yes.  No one should fall into the trap of exchanging their dreams for a paycheck.  Minimum wage is a lie.  And unfortunately it is indoctrinated into many high-screwled students who should go on to college or vocational training or whatever and learn the business or trade skills needed to advance their careers and secure their individual futures without settling for what government dictates as being a "fair" minimal standard for wages.  That's not a good standard for the concept of a fair day's wages for a fair day's work.

Let's scrap the minimum wage nonsense for more unregulated, free-market competition.  The market place should rule with respect to price, competition, product quality, and wages.

---

Esquire, Do you really believe that will significantly lower prices? My premise may not not have offered viable solutions, but I think it did hit the age old problem of "greed" squarely. You know what ever the market will bear. Suckers! There are supposed to be laws that are against collusion too, but when gas prices go up or down it's pretty much the same across the board in every locale where the change occurs. Granted one may shop around and find items that can better fit there budget, and they don't have to buy from a vending machine. But will more open trade guarantee that prices will significantly reduce prices or will it bring in more of the same?

Gerald,

Prices aren't about greed.  They are signals that tell us the relative worth of the scarce resources in this world.  If there are an abundance of typewriters and typists in this world, the cost for typewriters and typing services will be low.  Sometimes there are regional effects.  For instance, ice is worth more here in Texas in the summer than in Alaska in the winter.  Same for air conditioning, but the reverse for heaters and heating oil.  The price of horses changed when cars became popular.  It told us that we didn't need as many horses as before.  So fewer horses were raised.  They are still available, just not in the quantity they were in 1907 or 1807.  Sometimes there are short term disruptions, like hurricanes.  Then the price of plywood or gasoline may be temporarily elevated.  It tells us all we need to conserve for a while until supplies and demand come back into balance.  It also encourages anybody who can to start producing more or sending it where the price is highest indicating the need is greatest.  The cost of labor is economically speaking no different than gasoline.  If you lower the price too low (as Carter did with gasoline) there will be more demand than supply and there will be long lines or scalping to satisfy the market.  When you raise the price too high as with a minimum wage, there will be many people wanting to sell their labor and fewer people willing to pay for it.  Consequently, you will have people out of work who want to work.  What good is that?

---

Feedfwd. I somewhat agree with you, but I think I'm looking at this from a different angle. GW47 whatchamacallit's sell for $3.00. GW knows he could sell them for $2.50 and even $2.00 with concessions, and still make a handsome profit. Along comes Chang's whatchamacallit's and they're only $2.50. The quality is comparable too. GW now lowers his price to $2.50 because he doesn't want to lose any market share and he'll still have a comfortable profit margin. Chang counter's and lowers his price to $2.00. He can do this because he knows that it cost's him significantly less to produce than it does for GW and his profit margin is more adjustable than GW. GW is now in a bind. He has a major decision to make. If he want's to compete and stay in business he must downsize and take some loss in his personal income as well. Those dreaded concessions. Chang now has roped a dope, he goes down to $1.50. This is the killing blow to GW. He no longer can stay in business and closes down. The 3000 employees he once had for several decades are now without work. Chang raises his price to $3.50 but does it gradually so it doesn't cause too much alarm. His whatchamacallit's have also become more inferior but they will do. GW has no intention of reentering the market, and consumer's are longing for the good old days when a whatchamacallit sold for $3.00 and was solidly built. The government cannot do anything about it because Chang has many stock holder's and lobbyist that live here and uphold his and their interests. They want to raise the price to $4.00. or more. Oh! there are whatchamacallit's being made that are equivalent to the original GW whatcha's but are technologically superior but only the Millionaire elitist types can afford to use them, and they do. Chang cannot figure out how to acheive the same technology but is very interested, he buys the technology and gives those that control this technology a very handsome donation. Chang now can duplicate it but isn't for right now interested in doing so, but he does use the superior whatcha's personally and provides them to a select clientele. They are happy because they now have something they could never of had before and Chang he's the happiest of all because he has the very best of two world's.

A ver interesting topic indeed.

There are many issues involved. I have to agree with Gerald47 that greed is a concern that has to be delt with. Prices also have to be considered as does inflation as it all comes down to cost of producing the product made. Businesses and companies that produce goods and/or provide services have to make a profit to stay in operation. (you have to consider materials cost as well as labor) Employees are the ones that do the work and have to be paid a fair and decent wage if an employer wants to keep them. Good workers are sometimes very hard to find. The question remains as to what should dictate a fair and decent wage. American made goods were seen less in stores because they could be produced at a lower cost overseas with cheap labor and less restrictions in how businesses operate overseas as compared to here. American made products are more expensive than some imports so families with less income are sometimes forced to buy foreign made goods.

Too low a wage means a lot of turnover as people look for better paying jobs which means more expence in providing training. An employee who does not need much training is more valuable than one who has to be trained from the ground up. Too low a minimum wage puts strains on businesses struggling to survive to hire illegals who will work for less but still more than they could make back home.

We put ourselves in this problem by not paying attention to the effect inflation has on people's lives. I can only say that if had been on minimum wage I could buy a nice little meal at Waffle House. In the last five years that meal has risen 17%. The reason was not because of wages but because of the cost of the food and the Waffle House chain to increase profits. The cooks and waitressess have not had a wage increase during that time.

In essence the issue comes down to what is a fair wage for the work being done. There will always be debate on what defines a fair wage for the job being done. One thing I have learned in life is that those who have do not really know what it is like to struggle to make ends meet buying only the basic necessities. Produced goods have to meet a mimum standard. If wages stay low consumers may have to purchase products with lower quality only because it is all the can afford. Some people even have to do without medications simply because they cannot afford them. In summary I would have to say that we do need a minimum wage standard tied to inflation and costs of providing for self and family in terms of a living wage. 

Commander, I would suggest to you that many successful people "who now have" of the self-made type did know what it means to struggle to make ends meet.  It is no trivial matter to start a business.  Most businesses fail as a result.  Usually during the start-up period, the entrepreneur is faced with working 20 hour days and doing things like janitor work because he can't afford to hire somebody to do that.  There are no family vacations or even weekends off and only the bare necessities are purchased for the family in order to pour everything into making the business a success.  If it succeeds, we see a rich man, but when it fails, we rarely see the bankrupted man.

Can't speak for cooks, but waitresses and wait staff in general are paid mostly by tips.  I bet they have seen some wage increase, whether it has kept up with inflation or not.  But if the average tip is 10% or 15% or whatever, the percentage probably hasn't changed and the total income from tips increases with the price of the food.  Unfortunately, it doesn't take much to serve food.  There seems to be plenty of people willing to work in food service at low pay rather than finding work that pays better.  Who are we to judge their motives?

GW, interesting straw man.  However, as unbelievable as it may be, the only time when prices can be raised without bringing in new market competitors is when the business raising the price is protected by government.  While the original player (GW) may not return to the market, it is quite possible that somebody else will discover a new process or alternative that could drive Mr Chang from the market.  That is called progress.  If GW wants to participate in the market, he better find a way to remain competitive.  In many, if not most businesses, employee compensation including wages are a small fraction of the cost of goods sold and the difference in wages, especially after accounting for productivity is even smaller.  There are many entrepreneurs out there willing to try and fail in order to have a shot at the gold ring that prevent a monopoly from arbitrarily and excessively raising prices.  If you have any doubts, read Winners, Losers, and Microsoft where a list of potential or perceived monopolies are exposed.  Or read about how Charles Dow built Dow Chemicals on the backs of the German chemical giants who were trying to drive him out of business with "anti-competitive" product dumping.

Customers shouldn't have to pay more for something just because somebody is less efficient producing it and taxpayers certainly shouldn't have to subsidize customers or inefficient producers.

---

FeedFwd, So, is that why when I pick up just about any product, except maybe household chemicals, it, dare I say, 95% of the time is made in China? Should wages be commensurate to what we could produce those products here in the USA we just may get a handle on this? I realize it's not as simple as making a statement and then presto-change-o, it happens. I also realize that money is a commodity that is much easier to deal with than sweating ones arse off 20 hours a day with no assurance of succeeding. Much of the incentive is gone and the successful money brokers and monster importers of goods will for sure keep it that way unless there somehow is a shift. Ergo, a complicated task to say the least. The large population of American's making minimum or above minimum, and maybe double, triple min. wage don't really have much choice do they? There IS a greed factor here, and it's coupled with survival of the fittest which eventually will bring about tremendous upheaval. From reading through and participating in this forum is becoming clearly evident that it is manifesting, even if not directly tied to this discussion. Where do we start and how do we initiate a reversal of what is transpiring? And do we really want to change things? China has become exactly what Vance Packard predicted. They produce things so rapidly and so cost effectively that our retailers can literally throw away; the back door of the factory over the cliff via write-off, and not really be concerned about being prudent or thrifty. Go down and immerse yourself in the entry and slightly above entry levels of retail merchandizing and get a first hand look at how much waste there truly is. I've witnessed countless times the actual blatant destruction of merchandise because it is no longer cost effective to keep it in the inventory. It has become a "write off", a direct link to their bottom line. This was just one location and one store in a Fortune 500 chain nationwide. Now compound that by 100,000's if not 1,000,000's of retail merchants. The employee's were not even permitted to purchase these items at a reduced rate because the write off is equivalent to the companies purchase price or in many instances the retail sales price. I've personally witnessed where gleefully brand new clothing was cut up with scissors, entered into the books, and discarded, and the destruction is justified by saying it will eliminate fraud from within. This is just one flaw in our system where waste and greed are linked. How much meat is thrown out, or produce? Unbelievable amounts. Ask the guy stocking the counters he'll tell you. I've seen produced pitched because it has a slight blemish. Even have asked if I could purchase these items at a reduced price. Ha! Sometimes it happens, but most of the time it goes into a price increase, or the absence of prices ever going down. The sweetest, most crispy apple I've ever eaten was really ugly and on the converse I've purchased those that look like poster pictures but taste like pithy mush. Anyway on and on this could go, but herein lies some of the inherent reasons why wages are the way they are.

I believe the term "write off" relates to tax avoidance.  Our taxation of corporations and complex rules on depreciation does sometimes require companies to spend money on accountants and lawyers to help them navigate the rules for taxes and other regulatory impositions on business.  It is sad when a pair of jeans is more valuable as a "write-off" than as a salable piece of merchandise.  It happens.  As you noted, there are undoubtedly people willing to pay for obsolete or blemished products (think Outlet Malls), but thanks to government tax policy, those goods are more valuable being destroyed for the tax write-off than sold for a discount.  That should make us all a little bit mad at our government.  I'm sure there were a number of merchants who were stuck with essentially valueless vinyl LP records when consumer preferences switched to CDs.  I am old enough to remember (and see it repeated more than once) when car inventories stacked up in Detroit since market demand switched to more fuel efficient vehicles or from sedans and station wagons to SUVs and minivans.  I suppose the old whalers were despondent when petroleum and natural gas replaced whale oil for lighting or buggy makers when horseless carriages began to replace horsedrawn buggies.

I can't prove it, but I believe if government got out of the way of manufacturers, you would see a lot less foreign products in the US market.  But in any case, consumers buy what is available in the market place based on how much money they have and how they value goods and services.  Either the Chinese have better identified the key buying requirements of the mainstream American consumer (namely price) and they are doing a better job of meeting the demand, or there are many opportunities for somebody to go out and make products with better features, more durability, or some other measure that would command a price premium in the market.

I can speak from experience with my employer, a Fortune 500 company with multiple divisions that would probably qualify by themselves as Fortune 500 companies.  My division sells to industry, not to individual consumers.  We manufacture in many countries around the world.  However, we don't import (except for a few rare exceptions) products made in other world areas into the US.  We don't export a whole lot, but substantially more than we import.  And our raw materials are largely sourced locally for each of our factories.  Our designs and technology are almost exclusively developed in the US.  Our customer support is split between US and other world areas, partly as a function of cost and partly to provide 24 hour coverage without using shift work.  Another division of my company produces almost entirely for the retail market (think big box retailers).  That manufacturing is done in the US.  Don't know if it always will be, but it is today.

---

"Write-off" isn't always tax evasion, at least in the negative sense. There is always legitimately defective and or broken merchandise, etc.. It's the application of this write off feature and how it can be abused, which in my premise ties it into the greed analysis. It's basic human nature , i.e. if it can be done without negative repercussions it's going to be done, and its limits pushed. Somehow to me this seems to hold especially true in the business realm because it lines bank accounts and fattens wallets more so than it would as pertains to ones own faculties and beliefs. Simply stated, it can be rationalized charging $5 or more for a 16 oz. cup of beer or soda at the ball game, because it's "what the market will bear." Besides what other choice does the consumer have except to abstain, willingly or positionally. So many sit at home and watch it on TV and drink an entire 6 pack. Their wages don't permit them this luxury which at one time was affordable to all. Enter the greed factor once again. So, maybe a $6.00 minimum wage would be sufficient should all things being equal be in balance too? Fat chance, now that the forbidden fruit has been devoured and the grafting of more trees of its kind is immensely being sought. As pessimistic as this seems, it is a reality, and a stark one at that. Even so we are lead to believe that there are scrupulous businesses. Could that be a facade or is it truth? None wishes to bite the hand that feeds him.

No one else has something to add?

---

Yes, write-off can also mean refusing to throw good money after bad.  But the context it is usually used is the concept of depreciation which provides special tax treatment for capital goods that must be replaced over time.

Professional sports and entertainment in general has changed.  For many years, I had season tickets to the N.O. Saints.  When I was in college, I frequently went to Fenway Park for a Red Sox game and sat in the general admission bleachers.  We could yell to/at Yaz, Jim Rice, Fred Lynn, and Dwight Evans.  Even the "cheap seats" are all reserved seating now.  I rarely go to an "event" anymore.  I could afford it, but I would rather spend my money elsewhere.  It represents a significant portion of my discretionary spending.  I already have a TV.  I can rent DVDs and make my own popcorn, too.  It seems more and more, the only ones who can rally afford to buy tickets to major events are corporations.  I don't know how the average fan buys season tickets anymore.  If it is important enough, you make sacrifices in other areas. 

It used to be free to go hunting.  You just brought some farmer a bottle of whiskey and asked for permission and he'd let you hunt his land.  Today, in so many places you have to have a lease or get invited by somebody who does.  Leases are getting so expensive, that often it is only corporations who can afford it.  Public hunting grounds are often over hunted and can be dangerous.  Ironically, that is another way write-off is used.  Corporations (and individuals) can write off certain business entertainment expenses, or in other words, deduct those expenses from their taxable income.

---