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  1. #481
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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    Belthazor, SharmaK...I am enjoying reading the discussion between you two...and it is bringing up things I have not thought of for a while.

    I am going to post a new thread in a few minutes...and I'd like to invite both of you to attend if you are willing. Some of the things besing discussed here are germane to it...and some of what I have said in this thread will be included in that one.

    Hope you decide to stop by. I'll enter a link to it just as soon as I post it.

    Naturally, I hope Squatch and the others posting here stop in also.

    ---------- Post added at 11:59 AM ---------- Previous post was at 10:35 AM ----------

    Here is that link:

    http://www.onlinedebate.net/forums/s...actually-exist

  2. Likes Squatch347 liked this post
  3. #482
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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    Quote Originally Posted by SharmaK View Post
    Obviously this is all about helping the poor - seems kinda obvious to make poor people less poor, you give them more money. And ideally this would from their own job rather than handouts from charities or the government.
    I don't disagree. But what is important is to ask, what happens next?

    I think we both realize that it is pretty obvious that when you increase the price of something, people buy less of it. So if we increase the price of labor (ie their wage) won't employers buy less of it?

    So what happens to those poor who no longer have any income?



    Quote Originally Posted by Sharmak
    Sure, but you're suggesting that investment provides a better outcome than paying employees.
    Not at all, I simply pointed out that the balance between investment and current consumption is best understood by those who actually bear the price/reward for making the wrong decision, right?


    Quote Originally Posted by Sharmak
    What you're missing is that power imbalances means that a MW-worker does not have as much say in their salary
    I'm afraid that isn't a subject we've overlooked. What you are describing is called monopsony power and we've already shown that it doesn't exist in the US labor market outside of a few examples like professional sports.

    The TLDR answer is, you've forgotten that employers are competing also. Thus if some employer is drastically underpaying his employees, another could come along and hire them away with a slightly higher wage and then make the profit now lost by the first employer.

    You might be skeptical of this mechanism, but economists, especially labor economists have little doubt that it actually occurs. As I stated earlier in thread:

    As Prof. Don Boudreaux writes; http://cafehayek.com/2013/10/prove-t...ony-model.html



    Why not start, say, a maid service or a new hamburger joint or a lawn-care company? In order to escape the graphical implications of your monopsony model, hire your entire complement of workers all at once at the wage that you propose government dictate as the minimum wage. By hiring your workers in this way you will ensure that your firms don’t suffer marginal costs rising at a rate faster than the supply of low-skilled workers. If you launch such firms, you will – again, by your own assumption – have access to a huge pool of workers currently now paid less than their marginal revenue products.

    If your monopsony theory accurately describes the reality of the market today in the U.S. for low-skilled workers, why do you not make yourselves richer while simultaneously breaking the monopsony that you believe justifies legislation through which government, with your blessing, orders all low-skilled workers who cannot persuade employers to hire them at the ‘minimum wage’ to remain unemployed?




    The second is the technical economics term known as monopsony power (http://www.investopedia.com/terms/m/...asp?version=v1) which is what you are appealing to here. In fact, most of the time it is what people are referring to when discussing minimum wage. I don’t blame you for not knowing the term, it isn’t one used very often. So rarely in fact that Reuters had to put (not a typo) after using the word in a headline (http://www.reuters.com/article/2014/...A1K1VI20140221). Here is a good explanation of monopsony power if you are interested: http://www.economicshelp.org/labour-markets/monopsony/



    Really, what it is in the context you are referring to is the ability of an employer to dictate wages because they are the only employer (or there are very few employers, and I mean very few, like 2 or less). In that scenario there is no competition for labor and as such the employer can capture a large portion of the marginal contribution of labor. What can the employee do, he can’t go anywhere else after all.



    Here is the problem with that though. There are no monopsonies. Study after study has been conducted to detect monopsony power in markets. In big cites, small towns, restricted fields like medicine, technical fields like welding, and relevant here, low skill roles like harvesting fruit. No study has yet to find a hint of monopsony power (except one, more on that in a minute), not even in extreme cases of low skill roles in very small communities.



    A monopsony is when an employer has market power in the labor market, sort of the employer equivalent of a monopoly. The argument is that a monopsonist is able to hold wage below the equilibrium level, just like a monopolist would hold prices below the competitive equilibrium. Economic theory suggests that in response to a price floor that increases prices slightly, a monopsonist might not decrease labor demand. However, a recent study provides empirical evidence that seems somewhat at odds with this: large retailers pay more than small retailers.
    http://www.forbes.com/sites/modeledb...nopsony-power/



    First, the exception. This paper found monopsony power in Indonesia when employees were forbidden (by law) from moving to other towns for political stability reasons. This inability to move did seem to produce monopsony effects. However, the author finds them to be less than 5% and specifically notes that they noted no such effects in American labor markets

    http://www.iza.org/conference_files/...mund_p6819.pdf



    This paper examines the thesis that monopsony power is an important determinant of wages in nursing labor markets. Using data from the 1985-93 Current Population Surveys, measures of relative nurse/non-nurse wage rates for 252 labor markets are constructed. Contrary to predictions from the monopsony model, no positive relationship exists between relative nursing wages and hospital density or market size. Nor is support found for the presence of monopsony

    power based on evidence on union wage premiums, slopes of experience profiles, or the mix of RN to total hospital employment.
    http://www.angelfire.com/wizard/moti...bor/nurses.pdf



    The market for registered nurses (RNs) is often offered as an example of “classic” monopsony…Wage level analysis fails to provide support for classic monopsony, the relative wages of RNs in 240 U.S. labor markets being largely uncorrelated with hospital system concentration. Longitudinal analysis shows nursing wages declining with increases in hospital concentration. …Two conclusions follow. First, upward sloping labor supply need not imply monopsonistic outcomes. Second, absent more compelling evidence, nursing should not be held up as a prototypical example of monopsony—classic or new.
    http://www.trinity.edu/eschumac/JHE_...sony_Sep05.pdf



    Recent theoretical and empirical advances have renewed interest in monopsonistic models of the labor market. However, there is little direct empirical support for these models. We use an exogenous change in wages at Department of Veterans Affairs (VA) hospitals as a natural experiment to investigate the extent of monopsony in the nurse labor market. We estimate that labor supply to individual hospitals is quite inelastic, with short-run elasticity around 0.1. We also find that non-VA hospitals responded to the VA wage change by changing their own wages.
    http://www.dartmouth.edu/~dstaiger/P...ole%202010.pdf



    Although interest in monopsonistic influences on labour market outcomes has revived in recent years, only a few empirical studies provide direct evidence on it. This paper analyses empirically the effect of monopsony power on pay structure, using a direct measure of labour market ‘thinness’. We find that having fewer competitors for skilled labour is associated at the level of the establishment with lower pay for both skilled labour and trainees, but not for

    unskilled labour. These findings have potentially important implications for the economic theory of training, as most recent models assume that skilled pay is set monopsonistically but both unskilled and trainee pay are determined competitively. Our results support those assumptions for skilled pay and unskilled pay, but not for trainee pay.
    http://www.researchgate.net/publicat...e_and_Training



    This paper is a bit older, however the author conducts a series of longitudinal scans of the state of research in 94, and finds no evidence for monopsony effects. http://www.amazon.com/The-Minimum-Wa.../dp/0255363443



    Here is my favorite though:



    Summary

    The simple monopsony model provides an alternative explanation to the standard competitive model of how wages are determined. It predicts that employers will hold wages down below the value of the last worker’s contribution to output (“exploitation”) by limiting the number of workers they hire. But it is too simple to fit real American labor markets, so elaborations such as oligopsony or differentiation of employers are needed.



    Estimates of monopsony exploitation to date in American labor markets have yielded surprising results (see Table 1 for a rough summary). Monopsony does not appear to have been important in company mining towns, a standard textbook example, or in markets for teachers and nurses, early suspects. In fact, the largest plausible estimates of monopsony exploitation to date are not for blue-collar workers but rather for professional athletes and possibly college professors.

    Table 1
    Estimated Rates of Monopsonistic Exploitation in American Labor Markets


    Labor market Estimated rate of monopsonistic exploitation* Source
    Baseball players subject to reserve clause 100% to 600% Scully (1974), Kahn (2000)
    Baseball players not subject to reserve clause Close to zero Zimbalist (1992)
    Teachers and nurses Close to zero Boal and Ransom (2000), Hirsch and Schumacher (1995)
    University professors Less than 5-15% Ransom (1993)
    Coal miners in early twentieth century Less than 5% Boal (1995)
    Textile mill workers in the nineteenth century Some likely, but no consensus on magnitude Vedder, Gallaway, and Klingaman (1978), Zevin (1975)
    Low-wage workers No consensus
    Labor market in general 1% to 3% Brown and Medoff (1989)

    http://eh.net/encyclopedia/monopsony...labor-markets/

    Now, you’ll notice that 1-3% at the bottom. Does that range seem familiar?

    I referenced this earlier when I mentioned that the difference between marginal contribution and wage is generally 2-3% different. That was an empirical comment about what we see in the market place. Employers really don’t have the kind of wage controlling powers we often assume.

    http://www.onlinedebate.net/forums/s...l=1#post549491

    Interesting post by economist Don Boudreaux today. If supporters actually believe that the MW doesn't cause unemployment, why the phased approach? Why not an immediate change to overcome those greedy employers?


    In this earlier post I argued that if real-world hikes in the minimum wage were in fact premised on scientifically sound economics – the economics that pro-minimum-wage economists point to in order to justify such hikes and without at the same time denying that the law of demand applies to low-skill labor – then there is no reason why such hikes would be phased-in over time rather than increased immediately.

    Daniel Kuehn very quickly accused me of error. (He did so in the comments to the above-linked post.):

    The increases are nominal, that’s why they’re introduced gradually – to smooth the real value. That’s why the same people that want gradual nominal increases also want to peg to inflation.

    In other words, my argument is factually mistaken (according to Mr. Kuehn) because in reality the Los Angeles city government’s phased increases of the minimum wage are meant only to keep pace with expected inflation between now and 2020 (when that legislated wage is scheduled to hit $15 per hour).

    Mr. Kuehn’s argument, alas, still fails and my criticism of the L.A. government’s action remains valid and germane. The reason is that – according to the very legislation that Mr. Kuehn and others celebrate as a scientific effort to raise the pay of low-skilled Angelenos without simultaneously destroying some jobs for these workers – there will be no minimum-wage hike in Los Angeles until July 1, 2016 (when it rises from its current level of $9.00 per hour to $10.50 per hour. That’s more than 13 months from now. Further, because of inflation between now and then – inflation that Mr. Kuehn plausibly notes the L.A. city council is aware of – there will actually be a minimum-wage decrease, in real terms, between now and July 2016.

    So even if every scheduled nominal increase in L.A.’s minimum wage between July 1, 2016, and July 1, 2020 is designed (however roughly and imperfectly) simply to keep the wage adjusted for expected inflation over those four years, why wait until July 1, 2016 to raise the minimum wage? Why not raise it now, in full with no phase in, to whatever level the government thinks will correct for problems caused by monopsony power? The fact that this wage is not being raised immediately – now, in Spring 2015 – is strong evidence against the proposition that governments raise minimum wages in order to correct for the baneful consequences of alleged employer monopsony power. If such monopsony power exists, there’s absolutely no reason to delay raising raise the minimum wage; there’s no need for any phase in of increases in the real value of the wage to whatever level government officials deem is textbook appropriate.

    The only even remotely plausible way that I can see to salvage the L.A. government’s action in order to square it with Mr. Kuehn’s theory of what motivates governments to raise minimum wages is to claim that L.A. government officials believe that today – May 2015 – the $9 minimum wage is pretty close to being the textbook appropriate wage, and that all the L.A. government did is to arrange to index today’s minimum wage for expected inflation between now and 2020.

    But of course if this claim is to carry the day, why all the hoopla about L.A. raising its minimum wage? On this account, all the L.A. government did was to rather noisily index that city’s minimum wage for expected inflation starting in 2016 – meaning, in other words, that despite all the news coverage of the past few days, there has been no move by the government there to really increase in the minimum wage.

    So I’ve a question for Mr. Kuehn: do you believe that the recent, much-discussed action by the L.A. government raised the real minimum wage or did it not do so? If your answer is the latter, fine; we can join each other in being mystified at all the hoopla and celebration. But if your answer is the former, then how do you justify or explain the L.A. government’s decision to delay until July 2016 any increase in this wage? How do you square this delay with the monopsony model?

    ….

    A fun exercise, which I just did but will leave to Cafe patrons themselves to do on their own, is to calculate the annual rates of inflation that, if Mr. Kuehn’s explanation of their actions is correct, the L.A. city council likely anticipates over the next five years.

    ….

    In my opinion (which is shared by a large number of other economists), minimum-wage hikes, such as that recently done in Los Angeles, are not remotely motivated by government officials’ belief in, or even awareness of, the real-world relevance of textbook theories of monopsony power. Such legislation is instead the harmful consequence of a combination of politicians pandering to economic ignorance and political pressure by labor unions and other rent-seeking groups who do stand to gain from legislation that prices some of the most vulnerable low-skilled workers out of jobs.

    http://cafehayek.com/2015/05/competi...wage-hike.html





    And just to point out, when he says "In my opinion (which is shared by a large number of other economists),.." he means over 90% of polled economists. We often talk about the consensus in global warming (consensus being a scientific concept, I personally find no appeal in, but it seems to affect some people's opinion). Here is another issue where such a consensus exists. And, as I believe I pointed out earlier, not just in polls, but in papers published. There is a lot of fan fare around the two or three papers not showing an effect like Summers, et al. But well over 95% of academic work in this field does find a significant relationship and the vast majority of those fall within a standard deviation of the 1% per 10% increase level quoted earlier in thread.
    http://www.onlinedebate.net/forums/s...l=1#post547714


    Returning to a theme earlier in the thread. One of the common myths often trotted out by MW advocates is that companies drive down wages via monopsony power. But as economist Warren Myer points out. Monopsony power isn't enough to actually drive wages down, because competition drives wages back to higher levels:



    So let's consider a company paying minimum wage to most of its employees. At least at current minimum wage levels, minimum wage employees will likely be in low-skill positions, ones that require little beyond a high school education. Almost by definition, firms that depend on low-skill workers to deliver their product or service have difficulty establishing barriers to competition. One can’t be doing anything particularly tricky or hard to copy relying on workers with limited skills. As soon as one firm demonstrates there is money to be made using low-skill workers in a certain way, it is far too easy to copy that model. As a result, most businesses that hire low-skill workers will have had their margins competed down to the lowest tolerable level. Firms that rely mainly on low-skill workers almost all have single digit profit margins (net income divided by revenues) -- for comparison, last year Microsoft had a pre-tax net income margin of over 23%.

    As a result, the least likely response to increasing labor costs due to regulation is that such costs will be offset out of profits, because for most of these firms profits have already been competed down to the minimum necessary to cover capital investment and the minimum returns to keep owners invested in the business. The much more likely responses will be

    1.Raising prices to cover the increased costs. This approach may be viable competitively, as most competitors will be facing the same legislated cost pressures, but may not be acceptable to consumers
    2.Reducing employment. This may take the form of stealth price increases (e.g. reduction in service levels for the same price) or be due to a reduction in volumes caused by price increases. It may also be due to targeted technology investments, as increases in labor costs also increase the returns to capital equipment that substitutes for labor
    3.Exiting one or more businesses and laying everyone off. This may take the form of targeted exits from low-margin lines of business, or liquidation of the entire company if the business Is no longer viable with the higher labor costs

    http://www.coyoteblog.com/coyote_blo...62396240234375

    http://www.onlinedebate.net/forums/s...l=1#post554709


    Quote Originally Posted by Sharmak
    Of course there's a time lapse but how could that period be long - we're talking about a few dollars that will straight back into the economy.
    Assuming we are talking any positive amount at all (and remember, the peer-reviewed consensus is that it is negative), it is delayed likely by about a quarter. Remember, we aren't talking just the time it takes to get a direct deposit. Companies budget by quarters and have to take money out of capital investments to plan for future wages.

    Quote Originally Posted by Sharmak
    Let's not forget that the minimum is the lowest that a company will pay
    Well, not really. $0 is the minimum wage the company has to pay, right?

    Quote Originally Posted by Sharmak
    Then companies have to decide whether to take more profit vs investing their profits given a decent minimum wage! It's simple: if investment is better than taking profits then a company should direct its funds there. Shareholders will lose out on money upfront for higher gains. I don't see the problem here.
    Unfortunately that isn't how it works at all. Profits (also known as return to capital) have relatively fixed return rates. IE companies that return less than, say, 6% to their capital go out of business because their ability to fund the business disappears. You might well say "why don't they accept 5%?" The answer has to do with the risk involved that the investor is bearing and the minimum rate set by central banks. Sufficed to say, if you cut your capital return, you hire no workers.

    Your response also seems to misunderstand what profits are for a company. Profits are the source of investment, not a consequence of decreasing it. Companies take profits from activities and either a) investment them or b) distribute them. The people who recieve them in b) either b1) invest them or b2) consume them.

    Since companies have relatively stringent capital return requirements that simply means that they have less money to invest in the company if wage expenses go up. That means less future jobs, less productivity equipment for wage increases, and lower growth. All of those hurt low skilled labor.


    Quote Originally Posted by SharmaK
    That's fallacious - if there are no jobs then there is no company! There will always be a need for workers and a higher MW just means that the company has to decide what to do - they are fully in control of what to do with their money. And if some jobs are lost then surely, they couldn't have been necessary in the first place - or companies are probably deliberately firing people as a warning back to the government.
    What fallacy is that specifically?

    I'd be curious how, in your world, is the final arbiter of "necessary."

    Let's conduct a thought experiment. Say a city council set a price floor on apples of $1000 per apple in an effort to help the struggling apple industry.

    Do we agree that consumption of apples would drop to nearly zero?

    Does that mean that virtually all apple consumption "isn't necessary?"

    If so, what if I replace the word "apple" with "water?"


    Quote Originally Posted by Sharmak
    Firstly, 'mutually agreed' just means that the worker accepts whatever the owner pays - that's why the MW has to exist because it will be as low as the owner can possible force.
    To rephrase that a bit more accurately, the wage is the price somewhere between the worker's lowest acceptable price and the owner's highest acceptable price. What we find (as I demonstrated earlier) is that that price is pretty close (within 2-5%) of the marginal contribution of that worker.

    IE, wages tend to be almost exactly what revenue those workers generate for the company.

    But you didn't answer the question. Why are you, SharmaK, more adept at making that decision than the people actually affected by it?


    Quote Originally Posted by Sharmak
    Of course the equilibrium is artificial - the entire system is invented by people: there's nothing 'natural' about it. However:
    Obviously you know I meant, when I said artificial, was that the equilibrium was produced externally rather than by the people actually engaged in the system. Artificial equilibriums in economics are, without exception, bad. They must, by definition produce; shortages, dead weight loss, or (as in this case) idle resources (read: unemployed people).

    Quote Originally Posted by SharmaK
    1. the less employed have assistance programs to help them get back on their feet. perhaps we should be focusing on getting people out the MW jobs altogether and spend money on educating them.
    That is one option, but it doesn't mean that they are less employed does it? We could also focus on better education (I'm not sure that just spending money tends to produce that result) and not make them unemployable by raising the MW right?

    Quote Originally Posted by SharmaK
    2. I don't see that if the MW is higher and they're working the same hours...And it sounds fishy that losing at least 1 person and reducing hours of the remaining staff far more then compensates the rising of the minimum wage. I'd like to see a real breakdown on that - the math doesn't make sense.
    Except we know that the data says they don't work the same hours. See the most recent data out of Seattle:

    ABSTRACT
    This paper evaluates the wage, employment, and hours effects of the first and second phase-in of
    the Seattle Minimum Wage Ordinance, which raised the minimum wage from $9.47 to $11 per
    hour in 2015 and to $13 per hour in 2016. Using a variety of methods to analyze employment in
    all sectors paying below a specified real hourly rate, we conclude that the second wage increase
    to $13 reduced hours worked in low-wage jobs by around 9 percent, while hourly wages in such
    jobs increased by around 3 percent. Consequently, total payroll fell for such jobs, implying that
    the minimum wage ordinance lowered low-wage employees’ earnings by an average of $125 per
    month in 2016.
    Evidence attributes more modest effects to the first wage increase. We estimate
    an effect of zero when analyzing employment in the restaurant industry at all wage levels,
    comparable to many prior studies.

    https://evans.uw.edu/sites/default/f...ng%20Paper.pdf

    If you are interested in the math it starts on page 16.


    Quote Originally Posted by Sharmak
    3. So companies also get to pass through their higher wage bill AND fire people AND reduce hours! Seems to me they're gaining much more in this deal!
    I'm not sure how you read that in my response. What I indicated was that companies have to make a tradeoff between the increased labor expenditure and other factors. According to the literature, they tend to lay off some employees, reduce some employees' working hours, cut costs of safety and benefits, and pass along some portion of that to consumers.

    Those latter factors all sum up to the increased labor cost for the remaining workers. Because the pain is distributed does not make it beneficial.

    Quote Originally Posted by Sharmak
    4. Or they have to retool - staying in an MW-job doesn't allow you much time to reinvent yourself.
    I'm assuming you mean develop additional human capital so that their labor is more valuable in a market. Of course that takes experience and training, both of which are usually provided by an entry level job. More importantly, we know that that doesn't happen. Increasing the minimum wage reduces the ability of the economically vulnerable to get higher paying jobs later on.

    I've made the argument on this forum several times that income mobility and income inequality are largely artifacts of a growing economy. Prof. Powell agrees with me in a very convincing post:

    Income mobility can be measured over the course of an individual’s life or by the mobility between generations in the same family. Most people start their adult lives with relatively low earnings, because they have few job skills, little work experience, and incomplete education. As they build skills, gain experience, and complete their education, their earnings rise through their 20s, 30s, and 40s, and they typically achieve their maximum earnings in their 50s or 60s before they retire.

    Historically, this “lifecycle” of earnings has created a great deal of income mobility. Data from the University of Michigan Panel Survey on Income Dynamics show that, of people who were in the lowest fifth of income earners in 1975, only 5.1 percent of them were still in the lowest fifth 16 years later and 29 percent had actually risen all the way to the top fifth of income earners.

    Mobility between generations is less dramatic. A recent study from the National Bureau of Economic Research examined how children born in the 1980s did relative to their peers compared to how their parents did relative to their peers. It found that 8 percent of children born into families in the bottom fifth of income earners made it to the top fifth of income earners of their own age by the time they were 30. For children born in the middle fifth, 20 percent made the top by age 30.

    Contrary to the claims of the President, the study also found that the rate of intergenerational mobility was largely unchanged over the last 50 years. Yet, this does not mean that there are not barriers to upward mobility. The study found significant local and regional variations in mobility across the country. Neighborhoods with large densities of African-American populations tended to demonstrate lower relative income mobility.

    Unfortunately, President Obama’s proposals are unlikely to help increase income mobility in the lower-mobility segments of the U.S. population. The greatest barrier to income mobility for some workers is their ability to get up onto the first rung or two of the economic ladder that will allow them to build the skills in order to achieve a normal lifecycle of earnings.

    The minimum wage is one policy that prevents workers from stepping onto the first rung of the ladder. Some workers’ hourly productivity is below the federal minimum of $7.25 per hour. These workers are prevented from getting their first job and beginning the process of acquiring the skills that would lead to higher incomes in the future. Young African-Americans are disproportionately harmed. Nearly half of the workers earning the minimum wage are under 25, and unemployment among 16 to 24 year old African Americans remains at more than 23 percent. It is likely that an increase in the federal minimum wage would prevent even more workers from getting their first job that allows them to start climbing the economic ladder.

    http://www.independent.org/newsroom/article.asp?id=4939

    http://www.onlinedebate.net/forums/s...l=1#post534887


    Quote Originally Posted by Sharmak
    I disagree with the outcomes you suggest but MW makes sense for same reasons why we're not advocating for slavery or removing MW altogether
    You are free to disagree of course, but you have to recognize that you are doing so against the consensus opinion of economists.

    Who says I'm not for advocating its removal all together?

    And what does it have to do with slavery? This seems like an appeal to ridicule fallacy. Slavery involves the removing of an individual's right to consent to labor. Nothing in my position remotely resembles that. If anything, your prohibition of their right to consent is the only thing vaguely close.


    Quote Originally Posted by SharmaK
    Then they just have to take less profit.
    And if their profit is already razor thin? Presumably you are advocating them going out of business when you say "pay people a decent wage or not have a business" (of course conveniently what is decent is defined by you not by the employee). So if that is the case there then there are some group of employees without a job now, right?


    Quote Originally Posted by Sharmak
    It doesn't matter what the metric is
    You misunderstood my question. I was asking what is the relevant metric that you, Sharmak, are using to determine what their wage "should be?" IE if you happened to open a business, how would you determine a "fair" wage?


    Quote Originally Posted by Sharmak
    Poverty will always exist
    So you are conceding that these jobs increase poverty by decreasing the job options for the most economically vulnerable then, right? That seems to be what you are saying here. Its ok if this makes things worse, we just need to fix it some other way.


    Quote Originally Posted by Belthazor View Post
    We already can see technology is going to replace many of these jobs. Fast food is going to kiosks, there is a store in Seattle that has no check out clerks...
    what then will these people do to live??
    There are two types of automation in economic theory. The first one is where machines are used to augment human productivity (think the PC). The second is where they are used to replicate human labor (think fast food ordering kiosks). While not 100% always, the first tends to result when prices for labor naturally arise due to economic competition. The second tends to arise when artificial limitations are placed on the price of labor that results in distortions and dislocation.

    As labor prices rise, employers tend to invest capital in productivity devices that makes individual workers more valuable (since they produce more). This happens as the cost of an additional laborer rises above the cost of productivity devices.


    The latter happens when something like the MW, or legislative power for collective bargaining (via exclusivity arrangements) jumps the price of labor above its marginal contribution. IE when it costs me more per hour to hire a worker than I get in revenue from that worker. That tends to cause investment in labor replacement devices because of the exongenous nature of the shock.


    Minimum wages are almost exclusively consumed by workers with low human capital (the young or those just entering the work force) who are trading some portion of that wage for the training and experience investment. This is the "first rung on the economic ladder" argument. We find that the MW tends to prohibit those who present the most risk to an employer from getting these entry level jobs and thus prevents them from getting better, higher paying jobs later. That is why the economic mobility of inner city workers, especially minority workers tends to be negatively impacted by MW increases.
    "Suffering lies not with inequality, but with dependence." -Voltaire
    "Fallacies do not cease to be fallacies because they become fashions.” -G.K. Chesterton
    Also, if you think I've overlooked your post please shoot me a PM, I'm not intentionally ignoring you.


  4. #483
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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    Okay...I want to say that I am more in line with the thinking that a minimum wage probably brings with it more troubles than it does solutions.

    That said, however, I want to say that in a way that makes my position clear. I think this will do it...a snarky comment I have made in previous discussions on this issue:

    We can get all the jobs that have gone overseas back...and have jobs for everyone who needs and wants one...

    ...if only the greedy American workers would be willing to be realistic. Rather than asking for a higher minimum wage...they should do the right thing for America and be willing to work for 65 cents an hour.

    I can just about guarantee that if greedy American workers were willing to do that rather than complaining and asking for a higher minimum wage...

    ...damn near ALL the jobs would come back to our shores and full (REALLY FULL) employment will be the norm.

    Anyone disagree with that?

    Anyone think that if Americans were willing to work for the wages coolies in third-world countries earn...we'd get those jobs back and full-employment would be the norm?

    (I personally may have a minor disagreement...but from a position different from what others might see.)

    ---------- Post added at 03:05 PM ---------- Previous post was at 03:03 PM ----------

    Okay...first I want to say that I am more in line with the thinking that a minimum wage probably brings with it more troubles than it does solutions.

    That said, however, I want to say that in a way that makes my position clear. I think this will do it...a snarky comment I have made in previous discussions on this issue:

    We can get all the jobs that have gone overseas back...and have jobs for everyone who needs and wants one...

    ...if only the greedy American workers would be willing to be realistic. Rather than asking for a higher minimum wage...they should do the right thing for America and be willing to work for 65 cents an hour.

    I can just about guarantee that if greedy American workers were willing to do that rather than complaining and asking for a higher minimum wage...

    ...damn near ALL the jobs that have gone overseas would come back to our shores and full (REALLY FULL) employment will be the norm.

    Anyone disagree with that?

    Anyone think that if Americans were willing to work for the wages coolies in third-world countries earn...we'd get those jobs back and full-employment would be the norm?

    (I personally may have a minor disagreement...but from a position different from what others might see.)

  5. #484
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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    Quote Originally Posted by Frank Apisa View Post
    We can get all the jobs that have gone overseas back...and have jobs for everyone who needs and wants one...

    ...if only the greedy American workers would be willing to be realistic. Rather than asking for a higher minimum wage...they should do the right thing for America and be willing to work for 65 cents an hour.

    I can just about guarantee that if greedy American workers were willing to do that rather than complaining and asking for a higher minimum wage...

    ...damn near ALL the jobs that have gone overseas would come back to our shores and full (REALLY FULL) employment will be the norm.

    Anyone disagree with that?

    Anyone think that if Americans were willing to work for the wages coolies in third-world countries earn...we'd get those jobs back and full-employment would be the norm?

    (I personally may have a minor disagreement...but from a position different from what others might see.)
    The problem is that we’ve already done what you’ve suggested. We had children working long hours to help supplement parents’ poor wages. We’ve had people work long hours with no health care or safety standards. No heath insurance, poor diet, uneducated masses aren’t exactly a great vision for America is it?

    We’ve already had that vision of death and destruction and morally it found to be reprehensible. We don’t want to see children starve to death or our parents die in poverty in the streets. We want homelessness to be a rarity not a common sight. We don’t want people living in squalor and we don’t like dirty people serve or cook our food!

    Let’s no go backwards because some problems appear difficult to solve initially.

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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    Quote Originally Posted by SharmaK View Post
    The problem is that we’ve already done what you’ve suggested. We had children working long hours to help supplement parents’ poor wages. We’ve had people work long hours with no health care or safety standards. No heath insurance, poor diet, uneducated masses aren’t exactly a great vision for America is it?

    We’ve already had that vision of death and destruction and morally it found to be reprehensible. We don’t want to see children starve to death or our parents die in poverty in the streets. We want homelessness to be a rarity not a common sight. We don’t want people living in squalor and we don’t like dirty people serve or cook our food!

    Let’s no go backwards because some problems appear difficult to solve initially.
    I know we don't want to go there, SharmaK, and I hope you see enough substance in me to realize I don't want to do so.

    But the reality is that the BOD's and management of corporations are REQUIRED to maximize profits...which translates into "are required to reduce expenses maximally" which, unfortunately almost always means, "pay out as little as possible in wages."

    Yeah...there is competition for some skills between companies...and paying better salaries is one of the ingredients in that dynamic.

    But not for the janitors...or the clerks...or any of a number of jobs which are the only ones huge numbers of people will ever qualify for....additional training or no additional training.

    The correction (solution) is going to have to come from somewhere other than "creating jobs" "increasing wages" "decreasing wages" or any of the other stuff currently being tried. The corrections are going to be iconoclastic to the max.

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    Increasing the Minimum Wage hurts those most vulnerable in our society.

    Quote Originally Posted by Frank Apisa View Post
    I know we don't want to go there, SharmaK, and I hope you see enough substance in me to realize I don't want to do so.
    Yes, of course. I am wary of undoing some of the protections that have been hard fought for.

    But the reality is that the BOD's and management of corporations are REQUIRED to maximize profits...which translates into "are required to reduce expenses maximally" which, unfortunately almost always means, "pay out as little as possible in wages."

    Yeah...there is competition for some skills between companies...and paying better salaries is one of the ingredients in that dynamic.

    But not for the janitors...or the clerks...or any of a number of jobs which are the only ones huge numbers of people will ever qualify for....additional training or no additional training.

    The correction (solution) is going to have to come from somewhere other than "creating jobs" "increasing wages" "decreasing wages" or any of the other stuff currently being tried. The corrections are going to be iconoclastic to the max.
    Increasing the MW is the ONLY legislation that can be applied universally to all companies no matter the conditions. It’s known upfront so people should create a business that relies on lower wages. And the only people that are in the best position to make these kinds of decisions is the company itself: only they know how to weigh profits vs investments vs the fixed costs of running the business.

    I don’t think it’s unreasonable to have the minimum wage such that someone can live on it. The only people that will lose out are the companies: the workers win and the taxpayer wins. I don’t see the problem.

    ---------- Post added at 05:45 PM ---------- Previous post was at 05:33 PM ----------

    Your post is too long! I’ll respond to some but you’ll have to pick one point at a time.



    Quote Originally Posted by Squatch347 View Post
    I don't disagree. But what is important is to ask, what happens next?

    I think we both realize that it is pretty obvious that when you increase the price of something, people buy less of it. So if we increase the price of labor (ie their wage) won't employers buy less of it?
    Only if the raise is passed on.

    So what happens to those poor who no longer have any income?
    They are already taken of by the state. Perhaps if the remaining workers were paid a living wager that doesn’t require government assistance, then we would have better programs for the remaining poor.

    [Quote]
    Not at all, I simply pointed out that the balance between investment and current consumption is best understood by those who actually bear the price/reward for making the wrong decision, right?
    [Quote]
    Agreed, which is why we should have caps on CEO salaries or bonuses or profits. All that is happening is that companies don’t get to force the government to supplement their workers’ salaries.

    You might be skeptical of this mechanism, but economists, especially labor economists have little doubt that it actually occurs.
    I’m sure it occurs at higher paying jobs but in positions where the worker is easily replaced I don’t see it. Indeed, I would imagine that’s how we ended up with an MW in the first place.


    As I stated earlier in thread:

    Why not start, say, a maid service or a new hamburger joint or a lawn-care company?
    If I’m understanding a monopsony correctly,

    ---------- Post added at 07:40 PM ---------- Previous post was at 05:45 PM ----------

    SHARMAK: What you're missing is that power imbalances means that a MW-worker does not have as much say in their salary
    SQUATCH: I'm afraid that isn't a subject we've overlooked. What you are describing is called monopsony power and we've already shown that it doesn't exist in the US labor market outside of a few examples like professional sports.
    The monopsony seems to be a strawman since no-one is suggesting that MW is an answer to it. MW is an answer to companies paying too little. Left alone; at best, it will be close to MW but in reality, I expect it to be much lower.

    A corporation isn't vested in the interests of easily replaceable staff so it is incumbent upon an outside force, the government or unions, i.e. the workers, to fight for better wages. It's the same story in every working environment: an owner will always pay as little as he could possibly get away with and the low-skilled, easily replaceable worker has little say. From modern economies in the West to the practical slave labor in Dubai to the Filipino maid working in Hong Kong to the coal miner in the West and the burger flipper in McDonalds, there is a huge disparity in power and the larger the disparity, the worse the workers are paid.
    Last edited by SharmaK; January 22nd, 2018 at 04:09 PM.

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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    Quote Originally Posted by Frank
    ...if only the greedy American workers would be willing to be realistic. Rather than asking for a higher minimum wage...they should do the right thing for America and be willing to work for 65 cents an hour.

    I can just about guarantee that if greedy American workers were willing to do that rather than complaining and asking for a higher minimum wage...

    ...damn near ALL the jobs would come back to our shores and full (REALLY FULL) employment will be the norm.
    If we look at the composition of MW jobs throughout the last several decades, very few of them are of the type that are shipped overseas. They are generally menial, local service type jobs that are simply automated or replaced with no service at all (restaurants are the single biggest source of MW employment).

    While there would definitely be an improvement in the overall labor pool, especially for minorities if the MW were removed, I doubt many of those jobs would come from a decrease in imported goods and services.


    Quote Originally Posted by SharmaK
    The problem is that we’ve already done what you’ve suggested. We had children working long hours to help supplement parents’ poor wages. We’ve had people work long hours with no health care or safety standards. No heath insurance, poor diet, uneducated masses aren’t exactly a great vision for America is it?

    We’ve already had that vision of death and destruction and morally it found to be reprehensible. We don’t want to see children starve to death or our parents die in poverty in the streets. We want homelessness to be a rarity not a common sight. We don’t want people living in squalor and we don’t like dirty people serve or cook our food!
    I suspect this comes from a relatively shallow understanding of history. I'm assuming you mean during the initial phases of the industrial revolution? We absolutely had children working in factories during that point. However, it is important to remember they were leaving jobs on farms. It wasn't as if the alternative in the 1800s was that they blissfully played in meadows all day. They worked long and dangerous hours in agriculture. Hours that often were wiped out by weather, or crop blight, or economic downturn. Children starved on farms just as easily as they did in cities.

    How did we get them out of that condition? It wasn't minimum wage (whose origins are more segregationist and racist than benevolent), it was capital development. We became rich enough that we could afford to feed our families and not have 14 year olds work.

    Of course, given that the MW decreases employment and take home earnings, doesn't it increase poverty and homelessness rather than decrease it?


    Quote Originally Posted by Frank
    But not for the janitors...or the clerks...or any of a number of jobs which are the only ones huge numbers of people will ever qualify for....additional training or no additional training.
    I certainly understand why it is tempting to think this is the case, but the fact is that there is a lot of competition for that labor. Largely because it is semi-unskilled. So a janitor can become a clerk with no retraining. That bulk of labor is also competing across a large field of jobs.

    How do we know that this is the case? Because there isn't monopsony power in unskilled labor. We don't find any evidence that employers can push down wages for those types of jobs. Generally employers are paying something around 95-98% of the marginal contribution (the amount of value added by the labor) in wages to the employee. If they really had the power to push those wages down we would see much lower numbers.


    Quote Originally Posted by SharmaK
    I am wary of undoing some of the protections that have been hard fought for.
    I certainly sympathize with this point. I generally agree with Chesteron that we should understand why a fence was placed across a road before just roughshod removing it.

    That said, we do know why this particular fence was placed in the road. These protections originated in the 1920s and 1930s as efforts to prevent minority labor from competing with whites. The first MW bill introduced was specifically to prevent asian workers from "underliving" white workers and taking their jobs. MW got its first wide spread acceptance during the start of Jim Crow laws. It was a way of preventing blacks from competing with whites for labor and bettering their economic condition.


    Quote Originally Posted by SharmaK
    Only if the raise is passed on.
    It's true either way. If the raise is passed on to consumers, they will buy less of the company's product. If it isn't, the owner will buy less of the more expensive labor, right?

    Labor is a good just like any other. Assuming you agree with the idea that people buy less of things that are more expensive, wouldn't they also purchase less labor if it is more expensive?


    Quote Originally Posted by Sharmak
    They are already taken of by the state.
    So it is a better scenario that they are fully supported by the state rather than partially supported by the private sector? Why is that the case? Especially given that we haven't identified a tangible benefit to the policy.


    Quote Originally Posted by Sharmak
    Agreed, which is why we should have caps on CEO salaries or bonuses or profits.
    I don't follow your reasoning here at all. How is another third party interfering in a decision they aren't party to coherent with the idea that economic decisions are best understood by those who actually bear the price/reward for making the wrong decision?


    Quote Originally Posted by Sharmak
    I’m sure it occurs at higher paying jobs but in positions where the worker is easily replaced I don’t see it.
    Ok, but you do acknowledge the overwhelming evidence presented by the experts in this field right?



    Quote Originally Posted by Sharmak
    Indeed, I would imagine that’s how we ended up with an MW in the first place
    Well, no. The minimum wage was first adopted by those attempting to suppress minority workers for the benefit of whites and was later co-opted by the American eugenics movement (where it became the "living wage.").

    The Brotherhood of Locomotive Firemen, unable to block railroad companies from hiring the non-unionized black workers, called for regulations preventing the employment of blacks. In 1909, a compromise was offered: a minimum wage, which was to be imposed equally on all races.

    ...

    But this new wage rule, of course, did not eliminate the racism of nineteenth-century employers. Instead, it displaced their racism at the expense of black workers. One white union member at the time celebrated the new rule for removing "the incentive for employing the Negro."2 This early minimum wage rule was explicitly put in place to prevent African-Americans from finding employment, and it was successful in this goal.

    https://mises.org/wire/racist-history-minimum-wage-laws

    The business-friendly National Center for Policy Analysis points out “the 1931 Davis-Bacon Act, requiring 'prevailing' wages on federally assisted construction projects, was supported by the idea that it would keep contractors from using 'cheap colored labor' to underbid contractors using white labor.”

    African-American economist Thomas Sowell with Stanford University’s Hoover Institution gives an uncomfortable historical primer behind minimum wage laws:

    “In 1925, a minimum-wage law was passed in the Canadian province of British Columbia, with the intent and effect of pricing Japanese immigrants out of jobs in the lumbering industry.

    A Harvard professor of that era referred approvingly to Australia’s minimum wage law as a means to “protect the white Australian’s standard of living from the invidious competition of the colored races, particularly of the Chinese” who were willing to work for less.

    In South Africa during the era of apartheid, white labor unions urged that a minimum-wage law be applied to all races, to keep black workers from taking jobs away from white unionized workers by working for less than the union pay scale.”

    In today’s South Africa, The New York Times reported on poor workers, many of them black, angry at government leaders enforcing labor laws the price them out of a job.

    While our African-American President Barack Obama tries to make a minimum wage hike a moral imperative, Sowell reports no sympathy from the Congressional Black Caucus after his entreaties that currying reciprocal political favors on other matters is not “worth sacrificing whole generations of young blacks to huge rates of unemployment.” Rather than inflating wages that punish employers, a better policy solution (which Obama even included in his own budget this year) is the earned income tax credit, which puts more money in workers' pockets and saves their jobs.
    https://www.forbes.com/sites/carries.../#4c4ddf8811bb


    Quote Originally Posted by Sharmak
    The monopsony seems to be a strawman since no-one is suggesting that MW is an answer to it. MW is an answer to companies paying too little.
    I think there must be a little confusion here. These two sentences are contradictary. Monopsony power is, quite literally, the only economic justification for the minimum wage. It is the power of employers to "pay too little." When you say a company pays its employers too little, or tries to keep wages down, you are appealing to monopsony power. When we demonstrate that it doesn't exist, we are proving that companies don't "set wages," they take the wage rate that the market determines. Markets composed of competing companies and workers.

    If you concede that monopsony power doesn't exist, you are also conceding that companies don't "pay too little." Those two clauses are the same thing.




    You noted that my original post was too long (though I was simply responding to the points you offered up). I've taken a few of the more relevant points and put them here. Hopefully that is more managable.

    The primary point is whether you agree/disagree with the OP. Does the MW hurt minority and young workers? I haven't seen you offer an argument against that point. You agree that it reduces employment, you seem to concede that it reduces economic mobility, we've seen that it decreases the take home earnings of even those that keep their jobs. I'm not sure I've seen a defended or claimed benefit.


    Quote Originally Posted by Sharmak
    That's fallacious - if there are no jobs then there is no company! There will always be a need for workers and a higher MW just means that the company has to decide what to do - they are fully in control of what to do with their money. And if some jobs are lost then surely, they couldn't have been necessary in the first place - or companies are probably deliberately firing people as a warning back to the government.
    What fallacy is that specifically?

    I'd be curious how, in your world, is the final arbiter of "necessary."

    Let's conduct a thought experiment. Say a city council set a price floor on apples of $1000 per apple in an effort to help the struggling apple industry.

    Do we agree that consumption of apples would drop to nearly zero?

    Does that mean that virtually all apple consumption "isn't necessary?"

    If so, what if I replace the word "apple" with "water?"
    "Suffering lies not with inequality, but with dependence." -Voltaire
    "Fallacies do not cease to be fallacies because they become fashions.” -G.K. Chesterton
    Also, if you think I've overlooked your post please shoot me a PM, I'm not intentionally ignoring you.


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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    Quote Originally Posted by Squatch347 View Post
    If we look at the composition of MW jobs throughout the last several decades, very few of them are of the type that are shipped overseas. They are generally menial, local service type jobs that are simply automated or replaced with no service at all (restaurants are the single biggest source of MW employment).
    Not sure where you are getting that from, but even today, the only way we get any garment workers is to hire immigrants willing to work for coolie wages. The west coast...which is now home to most of the American garment industry...is proof of that. Unless you can speak Spanish...and are willing to work for a pittance, you would never be hired to work there.

    In the past, American garment workers were notoriously underpaid...and subject to incredibly horrible work environments...including, but not exclusively, very dangerous work conditions.

    The problem is not that we are exporting jobs for waiters, waitresses or that sort. Certainly we cannot export jobs of laborers who dig ditches. But manufacturing jobs can be...and they are damn near gone.




    While there would definitely be an improvement in the overall labor pool, especially for minorities if the MW were removed, I doubt many of those jobs would come from a decrease in imported goods and services.
    If Americans were willing to work for 65 cents an hour...there would be little job outsourcing to third world nations. If we were to become a third world nation with regard to wages...we might even get job insourcing to us.

    I don't expect any of this to happen.

    In any case, at some point, wages for work of the kind we are talking about will drop even further. Third world wages prices puts a heavy toll on manufacturing jobs here. If the technology continues to increase, soon production will be the realm of machines. Third world laborers will be feeling the same sort of pinch American laborers are feeling here now.

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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    How did we get them out of that condition? It wasn't minimum wage (whose origins are more segregationist and racist than benevolent), it was capital development. We became rich enough that we could afford to feed our families and not have 14 year olds work.
    Whose this "we"? The people on minimum wage can't feed their families without government assistance or multiple jobs.

    Of course, given that the MW decreases employment and take home earnings, doesn't it increase poverty and homelessness rather than decrease it?
    So paying people less decreases poverty somehow? That doesn't make sense. You're lumping the few (though how few, I don't know) people that would lose jobs with the rest of the people that earn enough of a living wage to not need government handouts to survive. I'm not denying that some people will lose their jobs but the rest would be much better off.

    I certainly sympathize with this point. I generally agree with Chesteron that we should understand why a fence was placed across a road before just roughshod removing it.

    OK, you're suggesting what exactly? No MW or a lower MW? Then aren't those people going to need more government assistance? I don't see your argument.

    Labor is a good just like any other. Assuming you agree with the idea that people buy less of things that are more expensive, wouldn't they also purchase less labor if it is more expensive?
    Not quite. Labor has a floor - with no labor, there is no business. So I don't buy that argument and if labor is too expensive because we need to pay people a living wage then so be it: that business should be folded.

    If a business is getting supplemented by the government (i.e. the taxpayer, i.e. us, the consumer) then we're already in effect paying more for our goods: it's just hidden away via our taxes and programs for the poor. More people on a living wage should reduce the need for those programs to be so large and thus reduce our taxes.


    So it is a better scenario that they are fully supported by the state rather than partially supported by the private sector? Why is that the case? Especially given that we haven't identified a tangible benefit to the policy.

    Of course, because then it would be explicit who is in control of the welfare of the poor. It's a bit backwards saying that the private sector "partially" supports anyone: they're paying a wage for work done at less than it is worth - the government picks up the rest of the tab.

    Agreed, which is why we should have caps on CEO salaries or bonuses or profits.
    I meant to say NOT have caps; that is, agreeing with you, that companies should decide how much to pay everyone. So long as it is a wage that doesn't require the government to kick in.


    Ok, but you do acknowledge the overwhelming evidence presented by the experts in this field right?

    Overwhelming evidence that doesn't appear to take into account how those people on a MW salary takes money from the government from what I can tell.

    [quote]
    I think there must be a little confusion here. These two sentences are contradictary. Monopsony power is, quite literally, the only economic justification for the minimum wage. It is the power of employers to "pay too little." When you say a company pays its employers too little, or tries to keep wages down, you are appealing to monopsony power. When we demonstrate that it doesn't exist, we are proving that companies don't "set wages," they take the wage rate that the market determines. Markets composed of competing companies and workers.
    [QUOTE]
    When I say a company pays too little, or as little as possible, that is going to be true, because when MW is lowered, so do wages. It won't go down to zero but it will be lower than MW because the companies can rely on government supplements. They just have to pay low enough such that the workers are pleased with both their salaries + supplements.

    But the power going into the negotiation of the wage rate, as I pointed out before, is imbalanced: the worker doesn't have the power that a company has in order to determine the "fair wage". In effect, the government and the unions, i.e. the representatives of the people, *is* setting the "fair wage" that is deemed acceptable to all workers.

    What you're seeing as the MW isn't so much an artificial restriction but the proper market forces, via government and unions, to determine the fair price of labor.


    If you concede that monopsony power doesn't exist, you are also conceding that companies don't "pay too little." Those two clauses are the same thing.

    I think the apparent contradiction you see is that "pay too little" is relative to some measure of a living wage (i.e. one that doesn't need government assistance). If there were NO GA then companies would be forced to pay a proper living wage or have no workers at all: the MW would naturally rise, so long as not too many people die of starvation while we re-equalize.



    ---------- Post added at 07:32 PM ---------- Previous post was at 06:58 PM ----------

    The primary point is whether you agree/disagree with the OP. Does the MW hurt minority and young workers?

    I don't think that's a relevant question though if that really is the OP. Why does it matter whether a person is young or a minority as to what the MW should be set. If a company decides to not pay a young person a decent wage or offer jobs to minorities because MW is too high, then what's that got to do with anything other than some companies don't like young or minority workers. Perhaps we need to ensure people have a working population that is consistent with their racial/age breakdowns of their operating region?

    I'm not sure I've seen a defended or claimed benefit.
    I have mentioned multiple benefits:
    - some (not all) people will be left with a living salary.
    - the government will have to supplement less.
    - companies are fully accountable for the salaries paid or they just have to not have those jobs or not exist.

    I'd be curious how, in your world, is the final arbiter of "necessary."

    Well, "necessary" at the proper living wage of course.

    Let's conduct a thought experiment. Say a city council set a price floor on apples of $1000 per apple in an effort to help the struggling apple industry.

    Do we agree that consumption of apples would drop to nearly zero?

    Does that mean that virtually all apple consumption "isn't necessary?"

    Of course, it means that the original apple consumption, assuming that the $1000 is really (per my own argument) reflects the real price (i.e. that properly takes into account a living wage that requires no government supplements), isn't one that would have been deemed available (/necessary).

    Another way to look at it is to think why are strawberries so cheap? They're cheap because the labor is miniscule - - the business would fail if we paid all the migrant workers a fair living wage. So raising MW does kill the strawberry market too. So does providing health care, etc. So we have to accept that people *should* and *must* work for a non-living wage, possibly multiple jobs, or not.

    There's no free lunch but the way I see it is that the government is supplementing the profits of companies that are favoring profits over their own workers.


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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    Quote Originally Posted by Frank Apisa View Post
    Not sure where you are getting that from,
    I'm getting that from the Bureau of Labor Statistics. https://www.bls.gov/cps/cpsaat45.htm 53.5% are tied to georgraphically based industries by the nature of the role. The number raises into the 70s if you consider jobs generally done in geoghraphically tied methods.

    Quote Originally Posted by Frank
    the only way we get any garment workers is to hire immigrants willing to work for coolie wages.
    Let's assume that this is the case for those who are assembling the garments (and the BLS data seems to indicate that it isn't). There are two problems, as I see it, with that argument. 1) It doesn't really have anything to do with you base argument. Because there are industries whose maginal contribution is low and are susceptible for offshoring doesn't mean that it is therefore impossible to create enough MW jobs to satisfy demand inside the US. 2) I think is incorrectly looks at that industry shallowly. There are certainly low paying jobs that assemble garments (a relatively low skilled job). But those jobs are often supported by numerous, more highly paid roles such as accountant, manager, qa/qc, sales, transportation, etc. Really the question would be, are these jobs ones that tend to act as a springboard for future role increase (and given the income mobility in the US I'm not sure how they aren't) or roles people tend to reside in for long periods of time (and of course, if the latter, what is the best economic policy to encourage the former).


    Quote Originally Posted by Frank
    But manufacturing jobs can be...and they are damn near gone.
    And some low skilled manufacturing certainly has been offshored. But manufacturing jobs in the US have been growing steadiliy since 2010, and more importantly, those roles are generally in moderate to high skill manufacturing which pays quite a bit more.

    So sure, we don't really sew as many cheap shirts anymore (we've automated a lot of that anyway), but we do manufacture composite materials, custom goods, circuit boards, chips, electronics, heavy machinery, and the vast, vast majority of capital goods manufactured.

    We've also traded a lot of those manufacturing jobs (the ones lost in the 80s and 90s specifically) with higher paying, better working condition service jobs.

    Really, I think the underlying question aimed at your point is, does trade make participants richer, or poorer?


    Quote Originally Posted by Frank
    If Americans were willing to work for 65 cents an hour...there would be little job outsourcing to third world nations. If we were to become a third world nation with regard to wages...we might even get job insourcing to us.

    I don't expect any of this to happen.
    I suppose this is the case, but why would we want that to happen? Why would we want to decrease trade (remember those third world nations buy a lot of what we sell) in order to have more locally sourced, poorly paid jobs?


    Quote Originally Posted by Frank
    If the technology continues to increase, soon production will be the realm of machines. Third world laborers will be feeling the same sort of pinch American laborers are feeling here now.
    This is a quasi-neo luddite argument. Technology has, historically, not tended to reduce employment. It certainly has caused the disappearance of certain types of jobs, but generally creates whole new areas of (traditionally) better paying and less dangerous jobs. Will certain manufacturing done by humans die out? Certainly. Humans probably won't be hand sewing sneakers anymore at some point. Or manually screwing toy trains together. Just as we don't manually thresh and cut wheat or manually pick cotton, or manually conduct repetitive welds. Instead, we manufacture circuit boards, focus on highly paid custom welds, operate in the industry of idea exchange, and a thousand other service and manufacturing jobs unthinkable 100 years ago. https://mises.org/library/dead-tree-luddites



    Quote Originally Posted by SharmaK View Post
    Whose this "we"? The people on minimum wage can't feed their families without government assistance or multiple jobs.
    I'm not sure what this has to do with my response. Please address my point. How did workers rise out of the (relative to now, but better than earlier) bad working conditions of the 1800s?


    Quote Originally Posted by Sharmak
    So paying people less decreases poverty somehow? That doesn't make sense. You're lumping the few (though how few, I don't know) people that would lose jobs with the rest of the people that earn enough of a living wage to not need government handouts to survive. I'm not denying that some people will lose their jobs but the rest would be much better off.
    I've now shown the evidence that this isn't the case three times. If you are going to maintain that the people who keep their jobs under a minimum wage increase actually take home more pay, you'll need to support that position.


    As for your argument, it has been shown in several posts now to be incorrect.

    If we accept the expert consensus, we know for the Seattle MW increase, about 16-20% of minimum wage workers lost their jobs (4% for every 10% increase). That means their wages went from $9.47 an hour to $0 an hour.

    And we know for the remaining 80-84% of minimum wage workers, their take home pay decreased $125 per month.

    So under the MW, neither group is better off, nor is either group earning more money. Both groups have less money in their pockets and less to support their families with.


    Quote Originally Posted by Sharmak
    Not quite. Labor has a floor - with no labor, there is no business. So I don't buy that argument and if labor is too expensive because we need to pay people a living wage then so be it: that business should be folded.
    That really isn't what is meant by floor in economics. But seting that aside, you are correct that there is a point where the business would fold rather than decrease labor. And, that happens a lot as I pointed out back in post 449.

    This paper explored the effects on the restaurant industry, and the MW's role in a relatively unresearched area, a company's likelihood to shut down.


    There are two important findings in this paper.


    1) A $1 increase in the minimum wage caused a 4-10% increase in likelihood to shut down.

    This applies to all restaurants and can show how devastating a policy the MW can be, especially to people starting out and looking for their first food service job to build a resume on. The raw unemployment created by this driver alone is in the thousands of lost jobs and opportunities.


    2) For restaurants hiring economically marginalized employees and more likely to serve economically marginalized communities, a $1 increase leads to a 14% increase in the likelihood of shutting down.

    This means that the impact of the minimum wage is most keenly felt on those most vulnerable in our society. Those who live on the economic margins find less access to restaurants, higher prices at restaurants, and fewer employment opportunities in a field known to serve as a first step on the economic ladder.



    This paper also agrees with a forthcoming paper (Aaronsen et al.) that found a 10% raise in the MW (ie between $1-$1.5) increased restaurant closures by 18.3%, representing thousands of jobs in most metropolitan areas. [ibid]

    IE the poor both lose employment and access to goods and services due to minimum wage increases.

    Quote Originally Posted by Sharmak
    if labor is too expensive because we need to pay people a living wage then so be it:
    Let's explore this a bit. So we close some number of businesses whose MC is below whatever you define as a living wage (I would love to see an actual defintion, in dollar amounts, for that). So we have more people fully on public assistance (rather than partially on public assistance). That increases the tax burden while also decreasing the tax base. So that increases the effective tax on everyone else, lowering their ability to consume goods and services, decreasing economic activity and increasing the cost of the standard of living, right?

    So now that the cost of the standard of living has increased, the living wage has to increas as well, right? Ok, that increases, which means we have to close more businesses who now don't meet the new definition. Which starts the process over again.

    I think we can both see where this is heading.


    Quote Originally Posted by Sharmak
    If a business is getting supplemented by the government (i.e. the taxpayer, i.e. us, the consumer) then we're already in effect paying more for our goods
    No disagreement here. But two wrongs don't make a right. Because we are distorting the market through corporate welfare is not a good argument for distorting it further through price controls. Why not just advocate for less corporate welfare?


    Quote Originally Posted by Sharmak
    they're paying a wage for work done at less than it is worth
    You're going to need to add a bit of defense to this position. How are they paying less than the work is worth? How do you determine that? Do you have evidence?


    Quote Originally Posted by Sharmak
    I meant to say NOT have caps; that is, agreeing with you, that companies should decide how much to pay everyone. So long as it is a wage that doesn't require the government to kick in.
    Ahh, thanks for the clarification. Fully agree here. That would seem, imo, to make the focus more on decreasing government handouts to companies rather than further distorting prices.

    Quote Originally Posted by Sharmak
    Overwhelming evidence that doesn't appear to take into account how those people on a MW salary takes money from the government from what I can tell.
    Because that is a red herring? If the government offers transfer payments, that has nothing to do with the fact that a) people lose their jobs and b) those that don't take home less pay. It might have something to do with what we advocate as a remedy, but not with those two facts, right?


    Quote Originally Posted by Sharmak
    When I say a company pays too little, or as little as possible, that is going to be true, because when MW is lowered, so do wages...

    Which is true for any price floor legislation, right? If we decreased the floor on sugar prices, sugar prices would fall. But take a look at a basic supply and demand curve on this:



    What also happens? Demand for that labor increases. IE more people have jobs and people are asked to work more hours.


    Quote Originally Posted by Sharmak
    But the power going into the negotiation of the wage rate, as I pointed out before, is imbalanced: the worker doesn't have the power that a company has in order to determine the "fair wage".
    I get this is what seem intuitive to you, but I've already demonstrated that this isn't the case. The company doesn't really have that power either. Go down to your HR department and ask them how they determine the wage rate for new employees. They won't say or even really hint at "we will tell the employee what they are going to earn." They will say "we look at comparable jobs in the local area."

    The employee has limited ability to set their rate because he knows that there are other employees lined up ready to underbid him right?

    The HR director knows the same thing. She knows that she can only push so hard before the employee goes somewhere else. Companies have to compete too.

    That is why we don't see companies paying way, way below what the employee contributes in revenue by their work. We know that in the US there aren't jobs where companies can push down wages like you suggest, right? Or, is the data presented in post 482 wrong somehow?


    Quote Originally Posted by Sharmak
    I don't think that's a relevant question though if that really is the OP. Why does it matter whether a person is young or a minority as to what the MW should be set.
    Becuase the effects of a policy are relevant to whether or not we should enact it, no?

    If I said President Trump just put forward a bill whose effect would be to decrease black employment by 10% and increase perpetual poverty for blacks by 14% would we think that that is a policy we should adopt or reject?


    Quote Originally Posted by Sharmak
    I have mentioned multiple benefits:
    - some (not all) people will be left with a living salary.
    - the government will have to supplement less.
    - companies are fully accountable for the salaries paid or they just have to not have those jobs or not exist.
    The problem is, that those benefits don't occur in reality, which makes them not a valid defense.

    - We know that the average person who retains their job will lose take home pay, not get more. And we know that others will lose their jobs.

    - Given the size of the unemployment effect, the government will have to supplement more not less. Fully replacing a $1760 monthly income is a lot more than subsidizing (and I'm not aruging for subsidization, just pointing out the numbers) a salary by $500 a month. And even for those keeping their jobs, there is an additional $125 a month to supplement the lost wages, right?

    - The minimum wage doesn't accomplish this. We've had the minimum wage in this country for about 100 years, corporate subsidies and individual transfer payments have increased, not decreased. You'd need to offer a mechanism for why this would be the case.


    Quote Originally Posted by Sharmak
    Well, "necessary" at the proper living wage of course.
    This just pushes back the question one stage. In your world, what is the "proper living wage" in dollar terms? IE, how do I know whether the job I'm being offered pays me a "living wage?"





    I'm curious if you had any thoughts on the origins and purposes of the minimum wage.
    "Suffering lies not with inequality, but with dependence." -Voltaire
    "Fallacies do not cease to be fallacies because they become fashions.” -G.K. Chesterton
    Also, if you think I've overlooked your post please shoot me a PM, I'm not intentionally ignoring you.


  12. #491
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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    I'm curious if you had any thoughts on the origins and purposes of the minimum wage.
    Quote Originally Posted by Squatch347 View Post
    I'm not sure what this has to do with my response. Please address my point. How did workers rise out of the (relative to now, but better than earlier) bad working conditions of the 1800s?
    We only need to go back to the of The Fair Labor Standards Act of 1938:

    (http://www.dol.gov/whd/regs/statutes...orStandAct.pdf)
    § 202. Congressional finding and declaration of policy(a) The Congress finds that the existence, in industries engaged in commerce or inthe production of goods for commerce, of labor conditions detrimental to themaintenance of the minimum standard of living necessary for health, efficiency, andgeneral well-being of workers(1) causes commerce and the channels and instrumentalities of commerce tobe used to spread and perpetuate such labor conditions among the workers ofthe several States;(2) burdens commerce and the free flow of goods in commerce;(3) constitutes an unfair method of competition in commerce;(4) leads to labor disputes burdening and obstructing commerce and the freeflow of goods in commerce; and(5) interferes with the orderly and fair marketing of goods in commerce. ThatCongress further finds that the employment of persons in domestic service inhouseholds affects commerce.(b) It is declared to be the policy of this chapter, through the exercise by Congressof its power to regulate commerce among the several States and with foreignnations, to correct and as rapidly as practicable to eliminate the conditions abovereferred to in such industries without substantially curtailing employment or earningpower.
    If those findings are no longer valid then perhaps the law should be addressed.


    I've now shown the evidence that this isn't the case three times. If you are going to maintain that the people who keep their jobs under a minimum wage increase actually take home more pay, you'll need to support that position.
    They have a higher wage - it's in the name! I haven't seen from any of your support that every single minimum wage work in every job will take home less money. I think your claims are based on a non-majority of workers.



    As for your argument, it has been shown in several posts now to be incorrect.

    If we accept the expert consensus, we know for the Seattle MW increase, about 16-20% of minimum wage workers lost their jobs (4% for every 10% increase). That means their wages went from $9.47 an hour to $0 an hour.

    And we know for the remaining 80-84% of minimum wage workers, their take home pay decreased $125 per month.

    So under the MW, neither group is better off, nor is either group earning more money. Both groups have less money in their pockets and less to support their families with.
    I don't think it's as clear cut as you make it out to be. There are also experts that say the effects are minimal: https://www.nytimes.com/2017/06/26/b...imum-wage.html cites:

    The first study, by a team of researchers at the University of California, Berkeley, supports the conclusion of numerous studies before it, that increasing the minimum wage up to a level that is about half or less of an area’s typical wage leads to at most a small reduction in employment.
    The article also suggests that the negative effects weren't due to the rise in MW but Seattle's boom. So I don't think the 'consensus' that you claim is by any means final or universal.


    That really isn't what is meant by floor in economics. But seting that aside, you are correct that there is a point where the business would fold rather than decrease labor. And, that happens a lot as I pointed out back in post 449.
    IE the poor both lose employment and access to goods and services due to minimum wage increases.
    A company that takes advantage of it's workers at the cost of the taxpayer doesn't really seem to be a good one. And while, those companies disappear, there will be others to take their place.


    Let's explore this a bit. So we close some number of businesses whose MC is below whatever you define as a living wage (I would love to see an actual defintion, in dollar amounts, for that). So we have more people fully on public assistance (rather than partially on public assistance). That increases the tax burden while also decreasing the tax base. So that increases the effective tax on everyone else, lowering their ability to consume goods and services, decreasing economic activity and increasing the cost of the standard of living, right?
    No, because there should be people that won't need as much assistance, or even assistance at all. You seem to be very one sided in your calculations!

    No disagreement here. But two wrongs don't make a right. Because we are distorting the market through corporate welfare is not a good argument for distorting it further through price controls. Why not just advocate for less corporate welfare?
    That's what increasing MW to a living wage level does. People getting paid a proper wage shouldn't require government assistance, they just won't qualify.


    You're going to need to add a bit of defense to this position. How are they paying less than the work is worth? How do you determine that? Do you have evidence?
    Just look at how migrant labor is paid for - this is a free market paying what the *company* determines is a fair wage. No American would take that job because they're being paid less than welfare and no company would raise the salary because they won't have a business. The migrant jobs only exist because they can survive on much less and work much harder.


    Ahh, thanks for the clarification. Fully agree here. That would seem, imo, to make the focus more on decreasing government handouts to companies rather than further distorting prices.
    "Distorting" wages are the only trigger a company has. As I explained before, it is universal in that it applies to all industries uniformly. It's simple to manage and understand for everyone.

    Because that is a red herring? If the government offers transfer payments, that has nothing to do with the fact that a) people lose their jobs and b) those that don't take home less pay. It might have something to do with what we advocate as a remedy, but not with those two facts, right?
    *some* people lose jobs and *some* people take home less pay.

    What also happens? Demand for that labor increases. IE more people have jobs and people are asked to work more hours.

    I get this is what seem intuitive to you, but I've already demonstrated that this isn't the case. The company doesn't really have that power either. Go down to your HR department and ask them how they determine the wage rate for new employees. They won't say or even really hint at "we will tell the employee what they are going to earn." They will say "we look at comparable jobs in the local area."
    Right, and again, looking at migrant wages (about $7 from Google) as where we would end up, or maybe a little more. But you keep missing the point that it doesn't matter where it settles if it settles far below a living wage. If all MW-workers went on strike or somehow unionized we'd be in a different situation but we know that MW-workers don't have that level of organization so the government per the Fair Labor Standards Act of 1938 has to step in.

    That is why we don't see companies paying way, way below what the employee contributes in revenue by their work. We know that in the US there aren't jobs where companies can push down wages like you suggest, right? Or, is the data presented in post 482 wrong somehow?
    "what the employee contributes in revenue by their work" is defined how? No strawberry pickers or amazon workers means zero revenue so surely a living wage should be a bare minimum for someone working a 40 hour week? Why should people do double-shifts or additional jobs and take money from the government if they are already working a full time job? That makes zero sense.

    Becuase the effects of a policy are relevant to whether or not we should enact it, no?

    If I said President Trump just put forward a bill whose effect would be to decrease black employment by 10% and increase perpetual poverty for blacks by 14% would we think that that is a policy we should adopt or reject?
    But that's why it's a universal national minimum wage no matter the industry or class of worker. I don't see how young people or minorities are relevant to the discussion: they don't necessarily have less living costs.


    The problem is, that those benefits don't occur in reality, which makes them not a valid defense.

    - We know that the average person who retains their job will lose take home pay, not get more. And we know that others will lose their jobs.
    We only know from your one-sided reports others differ.

    - Given the size of the unemployment effect, the government will have to supplement more not less. Fully replacing a $1760 monthly income is a lot more than subsidizing (and I'm not aruging for subsidization, just pointing out the numbers) a salary by $500 a month. And even for those keeping their jobs, there is an additional $125 a month to supplement the lost wages, right?
    I don't know if that's the case. If there are a few people that will lose their jobs then there will many others that will have that raise.

    - The minimum wage doesn't accomplish this. We've had the minimum wage in this country for about 100 years, corporate subsidies and individual transfer payments have increased, not decreased. You'd need to offer a mechanism for why this would be the case.
    It's simple: companies have been used to the taxpayers supplementing their profits. If they refuse to pay a living wage, which they legally can if the MW is lower than a living wage, in order to pocket the difference then what can the government do? They can only increase MW until it matches LW. It just means less profits. The mechanism is corporate greed.


    This just pushes back the question one stage. In your world, what is the "proper living wage" in dollar terms? IE, how do I know whether the job I'm being offered pays me a "living wage?"
    This seems to be a reasonable first place to start:
    Living Wage Versus Poverty Level. The federal poverty level is $23,050 for a family of four. That's equivalent to $10.60 per hour for a full-time worker. A worker making the minimum wage of $7.20 per hour would be below the poverty level.Jul 23, 2017

    Living Wage: Define, Calculate, Compare to Minimum Wage



  13. #492
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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    Here's another article debunking your primary claim that MW is a bad thing

    Source: Washington Post

    - The Seattle unemployment rate in April, for example, was 2.6 percent, the lowest it has been in nine years.
    - The new study’s findings are out of step with a large body of research pertinent to Seattle’s minimum wage increase, and the study has important limitations. Another recent studywithout those limitations, from Michael Reich, Sylvia Allegretto and Anna Godoey at the University of California at Berkeley, is more consistent with other research and shows that Seattle’s minimum wage is having its intended effects. The Berkeley study also squares with the lived experiences of people across the country who overwhelminglysupport making businesses provide fairer pay for a hard day’s work.

    - the idea that raising the minimum wage has a much larger effect on hours than on wages strains credulity, especially since, as economists Ben Zipperer and John Schmitt have noted, Seattle’s increase “is within the range of increases that other research has found to have had little to no effect on employment.” The study also finds that the minimum wage caused large employment and hours gains in higher-wage jobs, which suggests that its “methodology fails to account properly for the booming Seattle labor market during the period studied.”

    - It’s not entirely clear why the University of Washington team gets such a weird result — since their data isn’t public, we can’t check it — but it’s worth noting at least two important issues with their study.First, their data exclude workers at businesses that have more than one location; in other words, while workers at a standalone mom-and-pop restaurant show up in their results, workers at Starbucks and McDonald’s don’t. Almost 40 percent of workers in Washington state work at multi-location businesses, and since Seattle’s minimum wage increase has been larger at large businesses than at small ones — right now, a worker at a company with more than 500 employees is guaranteed $13.50 an hour, while a worker at a company with fewer than 500 employees is guaranteed only $11 an hour — these workers’ exclusion from the study’s results is an especially germane problem (note that low-wage workers in Seattle have had an incentive to switch from small firms to large firms since the minimum wage started rising). In earlier work, in fact, the University of Washington team’s results were different depending on whether these workers were included in their analysis; including them made the effects of the minimum wage look more positive.
    Second, the University of Washington team does not present enough data for us to assess the validity of its “synthetic control” in Washington — that is, the set of areas to which they compare the results they observe in Seattle. The Seattle labor market is not necessarily comparable to other labor markets in the state, and given some of the researchers’ implausible results, it’s hard to believe the comparison group they chose is an appropriate one.

    That doesn’t mean that nobody in Seattle will ever lose a job, of course, or that the University of Washington team’s research doesn’t merit further exploration. But it does mean that the Seattle minimum wage increase, like every minimum wage increase in American history, has lifted the wages of low-wage workers and been perfectly fine for the economy.
    So it looks like this study isn't in line with other studies (e.g. the Berkeley one) and certainly not the 'consensus' that you're claiming (unless you're saying it's consensus among anti-MW studies - the only ones that you have quoted).

    A study that doesn't release its data is also suspect and I have to reject that your claims here are valid given that there are other studies that are more open and consistent with facts on the ground.

  14. #493
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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    Quote Originally Posted by Squatch347 View Post
    I'm getting that from the Bureau of Labor Statistics. https://www.bls.gov/cps/cpsaat45.htm 53.5% are tied to georgraphically based industries by the nature of the role. The number raises into the 70s if you consider jobs generally done in geoghraphically tied methods.



    Let's assume that this is the case for those who are assembling the garments (and the BLS data seems to indicate that it isn't). There are two problems, as I see it, with that argument. 1) It doesn't really have anything to do with you base argument. Because there are industries whose maginal contribution is low and are susceptible for offshoring doesn't mean that it is therefore impossible to create enough MW jobs to satisfy demand inside the US. 2) I think is incorrectly looks at that industry shallowly. There are certainly low paying jobs that assemble garments (a relatively low skilled job). But those jobs are often supported by numerous, more highly paid roles such as accountant, manager, qa/qc, sales, transportation, etc. Really the question would be, are these jobs ones that tend to act as a springboard for future role increase (and given the income mobility in the US I'm not sure how they aren't) or roles people tend to reside in for long periods of time (and of course, if the latter, what is the best economic policy to encourage the former).




    And some low skilled manufacturing certainly has been offshored. But manufacturing jobs in the US have been growing steadiliy since 2010, and more importantly, those roles are generally in moderate to high skill manufacturing which pays quite a bit more.

    So sure, we don't really sew as many cheap shirts anymore (we've automated a lot of that anyway), but we do manufacture composite materials, custom goods, circuit boards, chips, electronics, heavy machinery, and the vast, vast majority of capital goods manufactured.

    We've also traded a lot of those manufacturing jobs (the ones lost in the 80s and 90s specifically) with higher paying, better working condition service jobs.

    Really, I think the underlying question aimed at your point is, does trade make participants richer, or poorer?




    I suppose this is the case, but why would we want that to happen? Why would we want to decrease trade (remember those third world nations buy a lot of what we sell) in order to have more locally sourced, poorly paid jobs?




    This is a quasi-neo luddite argument. Technology has, historically, not tended to reduce employment. It certainly has caused the disappearance of certain types of jobs, but generally creates whole new areas of (traditionally) better paying and less dangerous jobs. Will certain manufacturing done by humans die out? Certainly. Humans probably won't be hand sewing sneakers anymore at some point. Or manually screwing toy trains together. Just as we don't manually thresh and cut wheat or manually pick cotton, or manually conduct repetitive welds. Instead, we manufacture circuit boards, focus on highly paid custom welds, operate in the industry of idea exchange, and a thousand other service and manufacturing jobs unthinkable 100 years ago. https://mises.org/library/dead-tree-luddites
    I'm not going to respond totally here (I’d rather save it for follow up threads to my other thread) but there is a feeling I am getting about your general theme (one, I acknowledge, that you share with many people who write on this topic) that is disturbing to me.

    Allow me to mention it...and if you have any comments you think might set me on a track away from "disturbing"...I'd appreciate them.


    The people arguing from your position seem to be saying that they recognize that some people in our society will never be able to develop skills necessary to obtain a job it is worth paying a living wage to do…and that they have to be satisfied with that lot in life. (Sounds almost like St. Paul telling slaves that they should be satisfied with THEIR lot in life.)

    We all know that anyone can be found to clean urinals and toilets, empty wastebaskets, and mop vomit from floors after a management party gone amok. No need to pay those people a decent wage...they are a dime a dozen.

    So, too, the people who check out customers at the Walmart. An incredibly wealthy company like Walmart can actually make a big splash of raising its minimum wage to $11 and hour...which, here in New Jersey, would still leave a full-time employee living a life of poverty.
    And as I suggested, people arguing from your positon seem to think they simply have to accept it.

    Asked as questions, my concern becomes:

    What difference does “full employment” make if a significant percentage of the people who comprise that “full employment” cannot live a decent life on the wages they make…EVEN THOUGH THEY WORK A FULL WEEK DOING NECESSARY WORK.

    Are you suggesting that the less gifted among us, despite enormous wealth in our country, must be content to live deprived lives and be satisfied with that state of affairs?

    My mother was one of the most industrious people I’ve ever known, Squatch. She worked constantly and incredibly diligently. But she had quit school after the first grade (as was the custom among the children of immigrants back in the day) to help support her family…and was not one of the gifted. Should she have been relegated to a deprived life or one of several laborious jobs...and been asked to be satisfied with it?

    The thinking involved in the positions you advocate simply does not work for me.

    Talk to me about it.

  15. #494
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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    Quote Originally Posted by SharmaK View Post
    We only need to go back to the of The Fair Labor Standards Act of 1938:

    Interesting. However, the FLSA isn't the origins of the MW. It would be like looking at the Seattle legislation and asserting that that proves it isn't racist. I asked if you have any thoughts on the origins.

    The 1931 Davis-Bacon act is the first Federal Minimum wage and clearly was an instrument of minority exclusion in areas where they had been prospering (such as railroads). You can see the Forbes article already posted for a robust defenese.

    What's more, as the Mises article pointed out there are multiple industries exempted from the FLSA (these happened to be industries where Blacks found wage parity over the next 50 years btw). As we know both from that article and from three other scholarly articles(here, here, and here), the reason for those exemptions were explicitely and openly racist.


    Quote Originally Posted by Sharmak
    They have a higher wage - it's in the name!
    No, wage-rates increase. Because the price of something increases, does not mean the total money spent on them changes.

    As I've shown earlier, the average take home pay (IE the money workers have in their wallet) decreased by $125/month. Certainly there are individuals in there that have higher earnings due to minimum wage (though as I showed in the OP this is predominately to middle class white children), but for every one of them, there were more people who were more hurt by the wage rate increase, right? That is the definition of average. (especially since they demonstrated in both mean and mode).


    Quote Originally Posted by Sharmak
    I don't think it's as clear cut as you make it out to be. There are also experts that say the effects are minimal
    And there are researchers arguing that global warming isn't a thing. Do you accept the opinion of a tiny minority of scientists in a field?

    As I demonstrated in the OP:

    This is a relatively rare phenomenon in economics, but agreement with the claim “Does minimum wage hurt employment of low skilled workers” is about as universal as we can find. Recently, David Neumark (UC Irvine) conducted an environmental scan of the current state of economic research on the minimum wage. He reviewed more than 100 major academic studies (since 1992) and found that 85% of them find a negative effect on employment of low skilled workers.

    And Prof. Neumark is not the only economist to have done an environmental scan (a review of all academic literature on a subject) in recent years. Congress did one back in 1995 as well and found that the effects go beyond simply not hiring or letting go. At the margin, where people are retained at the higher income, other pecuniary benefits such as training, time off and working conditions suffered as minimum wages increased.

    It will also indicate that the minimum wage has wide-ranging negative effects that go beyond unemployment. For example, higher minimum wages encourage employers to cut back on training, thus depriving low wage workers of an important means of long-term advancement, in return for a small increase in current income.

    Now, the "study" the article is quoting is from UC Berkely and there are couple of things to note about it. 1) It isn't peer reviewed like the University of Washington study, and thus isn't as reliable (The reason is because its assumption set is effect neutral, a requirement for any peer-reviewed economics journal, they chose assumptions downplaying the effect). 2) It didn't have access to the same data. The UW study had unprecedented data due to its status as the "study of record" as designated by the Seattle City Council. UC Berkley used publically available data. 3) The UW study predicted the same results as the UC Berkely study if you didn't have the full data set, validating their model (it also explains how the UC Berkley paper was produced in two weeks, it essentially copied that sectoin of the UW study).

    [T]he reputation of the University of Washington researchers and the sheer volume of evidence they had on how Seattle labor markets were functioning produced strong defenses of the study – and criticism of those who were quick to trash the report.

    “This strikes me as a study that is likely to influence people,” MIT economist David Autor told the Washington Post after reviewing its findings. He said he found it “sufficiently compelling in its design and statistical power that it can change minds.”

    In a Facebook post shared far and wide on the popular Marginal Revolution website, Texas A&M economist Jonathan Meer praised the comprehensiveness of the research and joined Forbes magazine in knocking the credibility of the UC Berkeley labor center, saying its “previous work on the minimum wage is so consistently one-sided that you can set your watch by it, that unsurprisingly finds no effect.”

    Meer also said it was no accident that the labor center and Seattle City Hall released the upbeat report before the downbeat report was released, knowing it would get national attention.

    “I find that whole affair abhorrent. Seattle politicians are so unwilling to accept reality that they’ll undermine their own researchers,” Meer wrote. “I don’t envy the backlash this team is going to face for daring to present results that will be seen as heresy. I know that so many people just desperately want to believe that the minimum wage is a free lunch. It’s not.”

    http://www.capoliticalreview.com/top...um-wage-study/


    These [negative] consequences are consistent with the majority of the empirical research on this subject, as summarized by economists David Neumark of UC Irvine and William Wascher of the Federal Reserve Board. The UC Berkeley team ignored this consensus in its report, thus producing rose-colored results that don’t match reality.

    Unfortunately, this is par for the course for UC Berkeley’s union-backed Labor Center, which is run by former living wage organizer Ken Jacobs. In one troublesome 2014 email exchange obtained under the California Public Records Act, Jacobs asked for a recommendation letter from the Restaurant Opportunities Center to support a grant for his Labor Center’s ongoing “research and (technical assistance) work for local groups engaged in work to raise the minimum wage,” as well as “testimony/media work around the issue in the East Bay.”

    Among the groups Jacobs listed as a “partner” was Raise the Wage East Bay, suggesting that the Berkeley team is more activist than academic.

    http://www.sacbee.com/opinion/op-ed/...e29582665.html


    Quote Originally Posted by SharmaK
    The article also suggests that the negative effects weren't due to the rise in MW but Seattle's boom.
    There is rarely any real consensus in science, but when 85% of peer reviewed papers find essentially the same results (which agree with 100% of economic theories), it takes a compelling argument to argue why they are wrong.

    The suggestion you mention in this article was made by a single economist for a think tank the NYT labelled liberal. His argument itself is deeply flawed as detailed by the one of the authors in the next paragraph. Why? Because the UW study implemented exactly the kind of control he would have advocated for to detect whether that was the case, and they showed that it wasn't.


    Quote Originally Posted by Sharmak
    A company that takes advantage of it's workers at the cost of the taxpayer doesn't really seem to be a good one. And while, those companies disappear, there will be others to take their place.
    Uh, ok. Let's grant they aren't a "good" company (whatever that means). How does that affect the fact that businesses folding happens a lot as I pointed out back in post 449.
    IE the poor both lose employment and access to goods and services due to minimum wage increases.

    If your rebuttal is that "new businesses" will take their place (presumably making up the unemployment effect) you'll need to support that with evidence. Do you have evidence for that claim?


    Quote Originally Posted by Sharmak
    No, because there should be people that won't need as much assistance, or even assistance at all.
    Why would that be the case? The cost of the standard of living increased after all, why wouldn't that increase the number of amount of assistance people need?


    Quote Originally Posted by Sharmak
    That's what increasing MW to a living wage level does. People getting paid a proper wage shouldn't require government assistance, they just won't qualify.
    But as we've seen, the bulk of the evidence shows that for about 16% of the people their wage goes to $0/hour. I don't think you would call that a "proper wage" right? They would require more government assistance, correct?

    And for more than half of those keeping their jobs, thier total income goes down (even if the wage rate goes up), so they would qualify for more assistance, correct?

    Importantly, why doesn't this fact mean we shouldn't end corporate welfare rather than pricing people out of work?


    Quote Originally Posted by SharmaK
    Just look at how migrant labor is paid for - this is a free market paying what the *company* determines is a fair wage.
    Uhh...ok, how does this support your claim? You specifically claimed that MW workers were being paid "a wage for work done at less than it is worth." The fact that migrant workers (who generally aren't in a free market since they are subject to deportation controls) are paid $X/hour doesn't have an obvious connection to the "worth" of a minimum wage job.

    Can you support that MW workers are being paid less than what "their job is worth?"


    Quote Originally Posted by SharmaK
    "Distorting" wages are the only trigger a company has. As I explained before, it is universal in that it applies to all industries uniformly. It's simple to manage and understand for everyone.
    I have no idea what these sentences mean. Can you rephrase?



    Quote Originally Posted by Sharmak
    *some* people lose jobs and *some* people take home less pay.
    True, 4% of them lose their job for every 10% increase in the minimum wage. In Seattle this equated to 16% of minimum wage workers.

    And a majority of them take home less pay (importantly, we know that those people who lose pay lose more than those who don't gain, ie the net effect is a loss).

    Neither of these facts though affect that transfer payments are a red herring. If the government offers transfer payments, that has nothing to do with the fact that a) 4% of people lose their jobs for every 10% of MW increase and b) a majority of those that don't take home less pay. It might have something to do with what we advocate as a remedy, but not with those two facts, right?


    Quote Originally Posted by SharmaK
    Right, and again, looking at migrant wages (about $7 from Google) as where we would end up, or maybe a little more.
    First, please cite your source if you have one.

    Second, why would migrant wages be at all indicative of where wages in the US would end up absent a MW? It doesn't seem intuitive at all that wages of legally vulnerable fruit pickers in California would have anything to do with the wages of a citizen waitress in New York. Can you support this claim? If not, can you please retract it?


    Quote Originally Posted by Sharmak
    If all MW-workers went on strike or somehow unionized we'd be in a different situation but we know that MW-workers don't have that level of organization so the government per the Fair Labor Standards Act of 1938 has to step in.
    There is an interesting question then. If it is so clearly in their best interests to strike under the FLSA protections, why haven't we seen such a strike?


    Quote Originally Posted by Sharmak
    "what the employee contributes in revenue by their work" is defined how?
    In economics it is defined as Marginal Contribution. IE how much additional value does my work, per hour, contribute to my employer. There are literally entire journals and accounting classes on how to calculate it and most companies have to include it either in their public statements or in their business plan.

    At a high level it is the Marginal Product of Labor (ie how much more you produce per unit of labor) multiplied by the Price at quantity produced.

    As an analyst we would back end it by dividing total revenue by total hours from the income statement notes (with some WACC adjustments). Not quite as precise, but pretty close.


    Quote Originally Posted by Sharmak
    But that's why it's a universal national minimum wage no matter the industry or class of worker. I don't see how young people or minorities are relevant to the discussion: they don't necessarily have less living costs.
    You didn't answer the question.

    If I said President Trump just put forward a bill whose effect would be to decrease black employment by 10% and increase perpetual poverty for blacks by 14% would we think that that is a policy we should adopt or reject?

    [As for it being born primarily by minorities, see the OP for an explanation, I've already shown the data and mechanisms that lead to it being predominately an anti-minority policy.]


    Quote Originally Posted by Sharmak
    We only know from your one-sided reports others differ.
    By "one-sided" reports you mean over two dozen peer reviewed studies linked in this thread? And by others, do you mean a single, non-peer reviewed work?

    If you have peer-reviewed evidence, please support this claim with it, otherwise a retraction might be in order.


    Quote Originally Posted by SharmaK
    I don't know if that's the case. If there are a few people that will lose their jobs then there will many others that will have that raise.
    Well no, that isn't how the math works out.

    If we apply Seattle's MW increase (the numbers work for any other as well) we see the following and we assume the absolutely best case numbers for you, we get:

    From $1760 to $0 16%
    From $1760 to $1880 41.16% (49% of the remaining)
    From $1760 to $1635 42.84% (51% of remaining)


    So for every 100 people we saw:

    Employment Effect Total Wage Effect
    16 people lost their jobs -$28,160
    41 people took home more pay +$4,920
    43 people took home less pay -$5,375
    Total A loss of -$28,615 in wages

    Please let me know if you have any questions about the math. But given that the goal is to ensure thy have a living wage, it would seem the policy has the net effect of increasing the burden on the government by $28,615 for every 100 workers.


    Quote Originally Posted by Sharmak
    It's simple: companies have been used to the taxpayers supplementing their profits. If they refuse to pay a living wage, which they legally can if the MW is lower than a living wage, in order to pocket the difference then what can the government do? They can only increase MW until it matches LW. It just means less profits. The mechanism is corporate greed.
    Again, we've had a minimum wage for nearly 100 years, why hasn't that led to lower supplementing of their profits by taxpayers? We've actually seen corporate subsidies and handouts increase over that period. So why isn't the MW having the effect you claim it should? Indeed, why is the opposite effect occuring?


    Quote Originally Posted by SharmaK
    This seems to be a reasonable first place to start:
    Interesting. So given that (as shown earlier) the majority of MW workers aren't supporting a family of four (and if they were we would need to account for dual incomes), and the Federal Povery level in 2015 for an individual is $12,082, which equates to a wage for a full time worker of $5.81/hour.

    So is that the appropriate living wage? It would seem to be above your unsupported migrant wage claim above.


    Quote Originally Posted by SharmaK View Post
    Here's another article debunking your primary claim that MW is a bad thing
    Yay, a single amalgamatted datapoint! That surely disproves 85% of all the peer-reviewed economics articles published in the 40 years.

    You'll forgive us from accepting the word of an OPED in the Washington Post from a guy with no formal economics training who works at a pro-minimum wage advocacy group.


    Why is this not a relevant stat? Because MW has almost no effect on overall unemployment. It only affects MW employment right?

    And given that MW workers only account for about 3.04% of the population, a 16% decrease in MW employment would translate into a 0.01001984% effect on overall unemployment. IE inside the margin of error. That is why actual economists don't use the overall unemployment rate to measure MW effects.

    You'll also note that the OPED author cites a non-peer reviewed book as his support for "a large volume of research." The problem? It agrees with the findings in the OP. The authors find that the consensus view is within a range of 2-6% unemployment increase in MW workes for every 10% of MW increase.

    I appreciate the additional source.


    Quote Originally Posted by SharmaK
    A study that doesn't release its data is also suspect
    While I would normally agree with you (though that would also discount the Berkley study since they never released their data models), you have to blame the Seattle City Council. In the same resolution where they declared this to be the definitive impact study they also banned them from releasing the data since it is internally collected government data. Sufficed to say, NBER reviewers have seen the data and accepted the UW study (though not the Berkley one).



    Quote Originally Posted by Frank Apisa View Post
    The people arguing from your position seem to be saying that they recognize that some people in our society will never be able to develop skills necessary to obtain a job it is worth paying a living wage to do…and that they have to be satisfied with that lot in life.
    If I could ask a framing question, have you ever read Thomas Sowell's work on minimum wage? If you haven't, but you really want to understand the argument we're making, I would highly recommend his work Basic Economics. https://www.amazon.com/Basic-Economi...KBEBF68KRSCWFN


    Looking through your post, I think your major concern is about how we see economic mobility and people's chances to earn a larger wage.


    Concerns about Economic Mobility

    I think this perception is based on a misunderstanding of the argument. I believe both sides want people to be able to climb the economic ladder, be more successfull, and lead productive lives. My argument (and the argument of most of the people who agree with me (especially if we exclude the mouth breathers on both sides)) is that the minimum wage does exactly the opposite. If we go back to my OP you'll see that one of the criticisms I level against the minimum wage is exactly that it prevents people from "develop[ing] skills necessary to obtain a job it is worth paying a living wage to do..."

    That is the mechanism that makes it so dangerous to those who are most economically vulnerable. There is a risk to employing someone with no work experience, or no skills, or a criminal background, or a homelessness background. So when MW is high, employers tend to go with the safe bet, which tends (according to the data) to be the children of middle class suburbanites rather than inner city dwellers.

    It has been said that the MW takes the bottom rungs out of the economic ladder and justifiably so. When the MW is increased in a city, minority economic mobility (the ability to get a higher paid job at some point in your life) drops dramatically. By preventing those jobs that generally provide the first work experience from being available, you make the hurdle into a "living wage" job far higher and far fewer people are able to take it.

    We estimate the minimum wage's effects on low-skilled workers' employment and income trajectories...Over three subsequent years, we find that binding minimum wage increases had significant, negative effects on the employment and income growth of targeted workers. Lost income reflects contributions from employment declines, increased probabilities of working without pay (i.e., an "internship" effect), and lost wage growth associated with reductions in experience accumulation.
    http://www.nber.org/papers/w20724?ut...utm_source=ntw


    From post 123:

    Income mobility can be measured over the course of an individual’s life or by the mobility between generations in the same family. Most people start their adult lives with relatively low earnings, because they have few job skills, little work experience, and incomplete education. As they build skills, gain experience, and complete their education, their earnings rise through their 20s, 30s, and 40s, and they typically achieve their maximum earnings in their 50s or 60s before they retire.

    Historically, this “lifecycle” of earnings has created a great deal of income mobility. Data from the University of Michigan Panel Survey on Income Dynamics show that, of people who were in the lowest fifth of income earners in 1975, only 5.1 percent of them were still in the lowest fifth 16 years later and 29 percent had actually risen all the way to the top fifth of income earners.

    Mobility between generations is less dramatic. A recent study from the National Bureau of Economic Research examined how children born in the 1980s did relative to their peers compared to how their parents did relative to their peers. It found that 8 percent of children born into families in the bottom fifth of income earners made it to the top fifth of income earners of their own age by the time they were 30. For children born in the middle fifth, 20 percent made the top by age 30.

    Contrary to the claims of the President, the study also found that the rate of intergenerational mobility was largely unchanged over the last 50 years. Yet, this does not mean that there are not barriers to upward mobility. The study found significant local and regional variations in mobility across the country. Neighborhoods with large densities of African-American populations tended to demonstrate lower relative income mobility.

    Unfortunately, President Obama’s proposals are unlikely to help increase income mobility in the lower-mobility segments of the U.S. population. The greatest barrier to income mobility for some workers is their ability to get up onto the first rung or two of the economic ladder that will allow them to build the skills in order to achieve a normal lifecycle of earnings.

    The minimum wage is one policy that prevents workers from stepping onto the first rung of the ladder. Some workers’ hourly productivity is below the federal minimum of $7.25 per hour. These workers are prevented from getting their first job and beginning the process of acquiring the skills that would lead to higher incomes in the future. Young African-Americans are disproportionately harmed. Nearly half of the workers earning the minimum wage are under 25, and unemployment among 16 to 24 year old African Americans remains at more than 23 percent. It is likely that an increase in the federal minimum wage would prevent even more workers from getting their first job that allows them to start climbing the economic ladder.
    http://www.independent.org/newsroom/article.asp?id=4939


    Also as cited in the OP: https://www.jec.senate.gov/public/_c...ry-15-1995.pdf

    Studies referenced here show that MW increases result in employers cutting back on training, decreasing future economic prospects for MW workers (Hashimoto (1981, 1982), Leighton and Mincer (1981), Ragan (1981)). And that the MW has a dramatic effect on lifetime earnings (Brozen (1969), Feldstein (1973)).



    Just to summarize, I want to be clear that I specifically (and no serious contributor that I'm aware of) is making an argument that they have to "accept their lot." Rather, we are asking what is the best way to help people develop the human capital necessary to get jobs that better meet their needs? And in this thread, showing that the MW is forcing people into long term, multi-generational poverty.
    "Suffering lies not with inequality, but with dependence." -Voltaire
    "Fallacies do not cease to be fallacies because they become fashions.” -G.K. Chesterton
    Also, if you think I've overlooked your post please shoot me a PM, I'm not intentionally ignoring you.


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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    Quote Originally Posted by Squatch347 View Post
    Just to summarize, I want to be clear that I specifically (and no serious contributor that I'm aware of) is making an argument that they have to "accept their lot." Rather, we are asking what is the best way to help people develop the human capital necessary to get jobs that better meet their needs? And in this thread, showing that the MW is forcing people into long term, multi-generational poverty.
    Raising the minimum wage is abject nonsense in my opinion. Lowering the minimum wage is every bit as much nonsense. Seeking ways to help people "develop the human capital necessary to..." also.

    This thing you are trying to deal with must be handled so far outside the box you are working within...it would seem impossible if I dealt with it here.

    That will be the point of my series.

    I truly want to answer (logically respond to) what you are asking here...and will. But what I have to say cannot be gotten in a setting such as is here. I have to do it my own way.

    I promise I'll build up to an answer in the series.

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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    Quote Originally Posted by Frank Apisa View Post
    Lowering the minimum wage is every bit as much nonsense.
    From a political or economic perspective? If the latter, why so? If we accept what both reason and economic data is telling us, why would reducing a policy that creates artificial unemployment for those trying to start their careers be economic nonsense?

    Quote Originally Posted by Frank Apisa
    Seeking ways to help people "develop the human capital necessary to..." also.
    So do you not advocate for kids to go to school? Obviously a tongue in cheek question, but it seems an odd position to have that people learning would be considered nonsense for economic development and personal enrichment.
    "Suffering lies not with inequality, but with dependence." -Voltaire
    "Fallacies do not cease to be fallacies because they become fashions.” -G.K. Chesterton
    Also, if you think I've overlooked your post please shoot me a PM, I'm not intentionally ignoring you.


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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    Quote Originally Posted by Squatch347 View Post
    From a political or economic perspective? If the latter, why so? If we accept what both reason and economic data is telling us, why would reducing a policy that creates artificial unemployment for those trying to start their careers be economic nonsense?
    I did not say that lowering the minimum wage would not have positive economic impact, Squatch...I hope you realize that. Your question leads me to think that may not have been completely considered.

    "Full employment" is (in most cases) a positive economic condition. Lowering the minimum wage to 65 cents an hour could easily result in much more employment...to the point where the nominal "full employment" would be exceeded.

    But it sucks as an economic stimulator.

    Look, if you were to ask me this question: Do you think that I (Squatch) am clever enough to compose an argument that defeats the "it sucks as an economic stimulator" argument..

    ...my response to you would be an enthusiastic, "I would bet HUGE bucks on it."

    Do it if you want...I could easily enjoy it.

    I'm not being dismissive here, but I also am not interested in what I often refer to as, "I can piss farther than you arguments."

    The effect of raising the minimum wage; holding fast to an arbitrary (previously raised MW); or lowering the minimum wage can never really be divorced from other factors at work in the economic system. Demands for a raise in MW often comes during tumultuous economic times. The impact of any of those three possible moves is very, very difficult to measure.




    So do you not advocate for kids to go to school?
    No.

    Obviously a tongue in cheek question, but it seems an odd position to have that people learning would be considered nonsense for economic development and personal enrichment.
    For any individual, it could be a significant developmental endeavor, Squatch...but for the general question being dealt with here, it is almost disturbingly naive. Some could even say, an arrogant take on things. (I don't think that in you.)

    Allow me to go back to my late mother again. I would not have wanted to deal with teaching her how to set up an email account...and using it to any reasonable degree. (Hey, on several occasions she boarded a plane by herself and traveled from New Jersey to California to be with my brother and my sister, both of whom live out there with their families.) But to suppose that she could be trained or educated to the point where she could be of economic value the way you are supposing is out of the question.

    She was feisty...but she was essentially ignorant and totally unprepared to compete economically in the society in which we live. One other thing she was: She was part of a multitude of people in that same situation.

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    Increasing the Minimum Wage hurts those most vulnerable in our society.

    I've had to ignore some of the other points for expediency. My main objections are

    1. I don't agree that the Seattle paper is a valid argument against MW. There are other articles, and I will try and find some academic ones to support my case. In general, I'm not convinced that the articles have properly accounted for other effects.
    2. You agree that migrant workers are at a disadvantage but you appear to ignore that MW-workers are just as weak in their powers to negotiate salaries.
    3. In general, you haven't really explained why companies that survive on MW-workers should exist if their margins are so low that any increase kills them. For the remaining companies, that survive, you haven't explained why having less profits is necessarily a bad thing.

    Finally, if I accept your arguments are true and we shouldn't have an MW at all, then that makes the other issues I've pointed out even worse - we would have to continue to supplement the poor wages via government assistance programs and we're supporting companies that really should have folded a long time ago.

    I'm also not sure whether we're even arguing for the same goals: that everyone should have a living wage if they're working a full work week? Are you saying that we just have to have a world where there is a permanent underclass, in which case, why even bother with any social programs at all: perhaps this lower class of person dies at 40 but there will always be younger ones to take their place. It's all very well poking holes at something that exists but I don't see any arguments for an alternative.




    No, wage-rates increase. Because the price of something increases, does not mean the total money spent on them changes.
    Uh, MW is about this absolute minimum dollar value. It's not about the rate, i.e. the speed at which it increases.

    As I've shown earlier, the average take home pay (IE the money workers have in their wallet) decreased by $125/month.
    Is this from the Seattle article, I'm disputing? If so then we have to resolve the dispute.

    And there are researchers arguing that global warming isn't a thing. Do you accept the opinion of a tiny minority of scientists in a field?
    Unless you have proof of 'consensus' at that level (99%), this is irrelevant. Regardless of your other claims, there are other economists that claim the opposite. Of course, dismissing those opposing results as 'partisan' is going to be your next step, but then I could claim the same about yours (which the NY article does).

    Fortune also has problems with your study:

    The Seattle Minimum Wage Study Is Utter B.S. [source]
    ...
    One of the major limitations of the study, the Economic Policy Institute (EPI) points out, is that the data it analyzed excluded business with multiple locations, such as chain restaurants and big box retailers. So the 40% of employees they left out work at places like McDonald’s, Best Buy, and other stores that rely heavily on the low-wage workers who got the actual boost. That is a highly significant oversight.
    ...
    The UW study also draws what the EPI calls “implausible findings.” Since high-paying jobs went up during the period that low-paying jobs went down, the study implies that the minimum wage hike created better jobs for the rich at the expense of the poor. But this explanation fails to take into account the overall robustness and gentrification of Seattle’s economy—a much more reasonable explanation for the disparity.
    So we have two charges:

    1. That the study seemed to ignore data that didn't support it's claim.
    2. It ignores other effects that better explain it's claims

    It will also indicate that the minimum wage has wide-ranging negative effects that go beyond unemployment. For example, higher minimum wages encourage employers to cut back on training, thus depriving low wage workers of an important means of long-term advancement, in return for a small increase in current income.
    I don't know if you have demonstrated that these effects are solely due to minimum wage and not other factors. It's possible that things could be worse for them if it weren't for MW.

    On the issue of the Seattle study, I don't see it as 'conclusive' at all.

    There is rarely any real consensus in science, but when 85% of peer reviewed papers find essentially the same results (which agree with 100% of economic theories), it takes a compelling argument to argue why they are wrong.

    Can you prove this number?

    The suggestion you mention in this article was made by a single economist for a think tank the NYT labelled liberal. His argument itself is deeply flawed as detailed by the one of the authors in the next paragraph. Why? Because the UW study implemented exactly the kind of control he would have advocated for to detect whether that was the case, and they showed that it wasn't.
    His argument is repeated by Forbes.

    Uh, ok. Let's grant they aren't a "good" company (whatever that means). How does that affect the fact that businesses folding happens a lot as I pointed out back in post 449.
    IE the poor both lose employment and access to goods and services due to minimum wage increases.
    Then you're essentially agreeing with me that those companies shouldn't exist since they're ONLY doing so by the government supplementing their workers. It's clear they don't have the profits to properly pay people, which is why they fold. Why bother with worthless businesses that barely make it even at the taxpayer's expense! The market can decided that those businesses are failures.

    Why would that be the case? The cost of the standard of living increased after all, why wouldn't that increase the number of amount of assistance people need?
    Does it? If they're above the poverty line and they are getting enough money to live on then why would they still need assistance? And are the increases so dramatic that they're back to where they were before earning a living wage? Is that really your claim?

    But as we've seen, the bulk of the evidence shows that for about 16% of the people their wage goes to $0/hour. I don't think you would call that a "proper wage" right? They would require more government assistance, correct?
    For some people yes, but not ALL people. You're using the some side effects to reject the whole premise of MW.

    Uhh...ok, how does this support your claim? You specifically claimed that MW workers were being paid "a wage for work done at less than it is worth." The fact that migrant workers (who generally aren't in a free market since they are subject to deportation controls) are paid $X/hour doesn't have an obvious connection to the "worth" of a minimum wage job.
    So if you accept that they aren't in the 'free market' then surely, you have to accept that normal MW workers also are not in the 'free market'. They may not be being deported but when faced with starvation and homelessness, they have zero power to affect their salary in a proper free market of equals.

    Second, why would migrant wages be at all indicative of where wages in the US would end up absent a MW? It doesn't seem intuitive at all that wages of legally vulnerable fruit pickers in California would have anything to do with the wages of a citizen waitress in New York. Can you support this claim? If not, can you please retract it?
    Because being economically vulnerable is just as weakening as being legally vulnerable!

    Again, we've had a minimum wage for nearly 100 years, why hasn't that led to lower supplementing of their profits by taxpayers? We've actually seen corporate subsidies and handouts increase over that period. So why isn't the MW having the effect you claim it should? Indeed, why is the opposite effect occuring?
    Perhaps it's because the MW isn't high enough? That's why we should be talking about a 'living wage' and not just a bare minimum.
    Last edited by SharmaK; January 27th, 2018 at 10:49 AM.

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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    Quote Originally Posted by Frank Apisa
    She was feisty...but she was essentially ignorant and totally unprepared to compete economically in the society in which we live. One other thing she was: She was part of a multitude of people in that same situation.
    I think you might see her capabilities in a bit too much of an either/or capacity. Because she wasn't going to be able to fully adapt to digitized life does not mean she is incapable of producing economic value. She obviously had a set of well developed skills that she relied on in her personal life, it is hard to imagine that those skills wouldn't be valued by someone else. Just because she wasn't going to work in a traditional office environment doesn't mean she can't produce value in the incredibly diverse economy that we have.


    Quote Originally Posted by SharmaK
    1. I don't agree that the Seattle paper is a valid argument against MW. There are other articles, and I will try and find some academic ones to support my case. In general, I'm not convinced that the articles have properly accounted for other effects.
    2. You agree that migrant workers are at a disadvantage but you appear to ignore that MW-workers are just as weak in their powers to negotiate salaries.
    3. In general, you haven't really explained why companies that survive on MW-workers should exist if their margins are so low that any increase kills them. For the remaining companies, that survive, you haven't explained why having less profits is necessarily a bad thing.
    1) I'm open to reviewing criticism of that paper, but we have to keep two elements in mind. A) I've presented more than two dozen papers in this thread that found the same effect. That includes two papers that reviewed more than 100 papers a piece and found consensus around the stated argument. B) The UW paper is largely accepted by economists. I've no doubt that you will find a columnist or think tank argument against it, but I'd be surprised if you found anything at the NBER level of Peer-Review level. It just isn't that controversial of a finding.

    2) Because the evidence says they are not. Migrant workers are at a disadvantage because of their legal or illegal status and the ability to deport them if they lose the job. You can't deport US MW workers, can you? Additionally, I presented peer-reviewed evidence showing that no negotiation advantage exists for MW workers. I understand that it feels true that there would be some disadvantage, but we need to set that aside and look at the evidence.

    3) I'd be curious if you could explain the assumption behind your argument. Why would an increase in an artificial price hurting a company mean that company shouldn't exist? If we raised the price of wood to $1B/foot, a lot of companies would go out of business, why does that mean they shouldn't be in business?

    To phrase it a different way, why does your arbitrary wage number reflect on their solvency?


    Quote Originally Posted by Sharmak
    Finally, if I accept your arguments are true and we shouldn't have an MW at all, then that makes the other issues I've pointed out even worse - we would have to continue to supplement the poor wages via government assistance programs and we're supporting companies that really should have folded a long time ago.
    I'm not sure why this would be the case. Why do we have to maintain a corporate welfare program?


    Quote Originally Posted by Sharmak
    I'm also not sure whether we're even arguing for the same goals: that everyone should have a living wage if they're working a full work week?
    I think we do have the same goals. I'm simply pointing out what seems, to me and economists at least, a relatively obvious point. If you don't want a systematic, permanent underclass, don't legislate away the first wrungs on the economic ladder.

    I'm pointing out that if we look at the actual evidence, we see that MW creates that underclass. It reduces economic mobility and increases intergenerattional poverty.

    Do you disagree with either of those effects? If so, why?


    Quote Originally Posted by SharmaK
    Uh, MW is about this absolute minimum dollar value. It's not about the rate, i.e. the speed at which it increases
    Minimum Wage is listed in dollars per hour, right? IE the rate that you are paid at, right?



    Quote Originally Posted by Sharmak
    Unless you have proof of 'consensus' at that level (99%), this is irrelevant
    So if a scientifiic principle does not have 99% consensus, doubt is reasonable?

    If so, are you willing to retract the claims made in the OP of this post? (http://www.onlinedebate.net/forums/s...l=1#post502411) Given that most of those positions aren't held at the 99% level, that there are researchers who disagree with the majority opinion, then clearly holding that minority position isn't anti-science right?


    Quote Originally Posted by Sharmak
    So we have two charges:

    1. That the study seemed to ignore data that didn't support it's claim.
    2. It ignores other effects that better explain it's claims
    You linked your Pocket, not the source.

    Here are some problems with the article. 1) "Fortune" doesn't have a problem with it, it is an OPed, thus not even subject to the same editorial standards of a real article. 2) It isn't peer-reviewed, so the author's claims aren't verified. 3) It links the same article you already linked with the NYT article, thus we don't have two objections, we have one, from a think tank whose position was already shown (as did the NYT) to be rejected by economists. 4) The author isn't an economist either, so putting forward his position is an appeal to authority fallacy.

    As for your "two" objections (and this is why we generally don't look at Opeds for economic opinion), they were already addressed in the paper:

    Multi-site companies were more likely than single site companies to reduce employment, thus excluding them muted, not exagerated the effect:

    We therefore exclude multi-site single-account businesses from the analysis, referring henceforth to the remaining firms as “single-site” businesses. As shown in Table 2, in Washington State as a whole, single-site businesses comprise 89% of firms and employ 62% of the entire workforce (which includes 2.7 million employees in an average quarter). Multi-location firms may respond differently to local minimum wage laws. On the one hand, firms with establishments inside and outside of the affected jurisdiction could more easily absorb the added labor costs from their affected locations, and thus would have less incentive to respond by changing their labor demand. On the other hand, such firms would have an easier time relocating work to their existing sites outside of the affected jurisdiction, and thus might reduce labor demand more than single-location businesses. Survey evidence collected in Seattle at the time of the first minimum wage increase, and again one year later, increase suggests that multi-location firms were in fact more likely to plan and implement staff reductions.
    https://evans.uw.edu/sites/default/f...ng%20Paper.pdf


    EPI ignored the fact that the Seattle economy was growing. The increase in higher paying jobs was due to that growth, and is fully explained by surrounding community control growth rates and historical growth rates. Thus, they didn't ignore it, they accounted for it, it is literally the first four pages of methodology discussion.

    While the preponderance of evidence suggests that a low-wage threshold slightly above the statutory minimum poses little risk of miscoding jobs as lost when they have really been promoted to higher wage levels, in our preferred specifications we report findings based on a relatively conservative $19 threshold. The $19 threshold is roughly twice the initial value of the minimum wage, a level beyond which cascading effects are less likely to occur (Neumark, Schwizer, and Wascher, 2004).
    ibid.


    Quote Originally Posted by SharmaK
    I don't know if you have demonstrated that these effects are solely due to minimum wage and not other factors. It's possible that things could be worse for them if it weren't for MW.
    That is why economists control for those other kinds of factors using a variety of control methods and multi-variate regression tests. That is why the section you are responding to is a quote, from an economist. Simply saying "you haven't demonstrated that" isn't a valid objection to a statement by a well trained and respected expert in the field. Additionally, he cites about a dozen peer-reviewed papers to support that claim.


    Quote Originally Posted by SharmaK
    Can you prove this number?
    From the OP:

    Recently, David Neumark (UC Irvine) conducted an environmental scan of the current state of economic research on the minimum wage. He reviewed more than 100 major academic studies (since 1992) and found that 85% of them find a negative effect on employment of low skilled workers.


    Quote Originally Posted by SharmaK
    Does it? If they're above the poverty line.....
    Why would they be above the poverty line? The cost of living increased, the poverty line should increase as well, right? Also, the poverty line in the US is semi-reflective of median wage, so by increasing the MW, you de facto increase the poverty line.


    Quote Originally Posted by SharmaK
    For some people yes, but not ALL people. You're using the some side effects to reject the whole premise of MW.
    Wait, why would some of those people not be qualfied for additional support if they lose all of their wages, but were qualified for support when they had wages?

    I don't think 16% unemployment increase in MW workers is some "side effect" that is a pretty major effect. If 16% of people who took a drug died, we wouldn't be dismissing it as some "side effect."


    Quote Originally Posted by ShramaK
    They may not be being deported but when faced with starvation and homelessness, they have zero power to affect their salary in a proper free market of equals.
    No one has that power in a market. Market prices aren't set by individuals, they are set by the confluence of buyer percieved value and seller percieved value.

    Are you claiming (despite all the evidence provided regarding monopsony power) that employers have "power to affect" wages? Can you support that claim?


    And, more centrally, you never answered the point. How do you know that MW workers are being paid below what the job is "worth?"


    Quote Originally Posted by Sharmak
    Because being economically vulnerable is just as weakening as being legally vulnerable!
    What does that unsupported claim have to do with supporting your claim? Why would the wages of fruit pickers in California would have anything to do with the wages of a waitress in New York. Can you support this claim? If not, can you please retract it?

    Quote Originally Posted by SharmaK
    Perhaps it's because the MW isn't high enough? That's why we should be talking about a 'living wage' and not just a bare minimum.
    Hmm, well given that we established that the Living Wage for most MW workers is about $5.81/hour, these two sentences are contradictary.






    Just to highlight a few of the points skipped, because they are relevant.

    1) The origins of the MW are attempts by various groups to price out minorities and prevent them from competing with whites. While their motives are undeniably worse, their understanding of the effects seems better than most MW supporters today.

    2) I'm still interested in an answer to this question: If I said President Trump just put forward a bill whose effect would be to decrease black employment by 10% and increase perpetual poverty for blacks by 14% would we think that that is a policy we should adopt or reject?

    3) I think the math, validated by peer consensus on these numbers is important to highlight. Assuming we are looking for a better economic condition, MW isn't the vehicle.


    From $1760 to $0 16%
    From $1760 to $1880 41.16% (49% of the remaining)
    From $1760 to $1635 42.84% (51% of remaining)

    So for every 100 people we saw:

    Employment Effect Total Wage Effect
    16 people lost their jobs -$28,160
    41 people took home more pay +$4,920
    43 people took home less pay -$5,375
    Total A loss of -$28,615 in wages
    Please let me know if you have any questions about the math. But given that the goal is to ensure thy have a living wage, it would seem the policy has the net effect of increasing the burden on the government by $28,615 for every 100 workers.
    "Suffering lies not with inequality, but with dependence." -Voltaire
    "Fallacies do not cease to be fallacies because they become fashions.” -G.K. Chesterton
    Also, if you think I've overlooked your post please shoot me a PM, I'm not intentionally ignoring you.


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    Increasing the Minimum Wage hurts those most vulnerable in our society.

    Quote Originally Posted by Squatch347 View Post
    1) I'm open to reviewing criticism of that paper, but we have to keep two elements in mind. A) I've presented more than two dozen papers in this thread that found the same effect. That includes two papers that reviewed more than 100 papers a piece and found consensus around the stated argument. B) The UW paper is largely accepted by economists. I've no doubt that you will find a columnist or think tank argument against it, but I'd be surprised if you found anything at the NBER level of Peer-Review level. It just isn't that controversial of a finding.
    Fair enough. Then it’s on me to find evidence supporting MW. Yet, if economics as a discipline is a real science then why do countries all over the world implement a minimum wage? It’s a bit much to call them anti-scientifi. Perhaps it’s just the only solution. I still don’t see from you an alternative nor why the tax payer should be subsidizing companies that don’t pay a living wage.

    On the other hand, all this negativity is worthless because we have MW and it’s a real fact of life. I haven’t seen a good way to deal with the issues of poverty yet. I think everyone should work and that if they work then they need to earn enough to live on.


    2) Because the evidence says they are not. Migrant workers are at a disadvantage because of their legal or illegal status and the ability to deport them if they lose the job. You can't deport US MW workers, can you? Additionally, I presented peer-reviewed evidence showing that no negotiation advantage exists for MW workers. I understand that it feels true that there would be some disadvantage, but we need to set that aside and look at the evidence.
    I don’t know why you’re strawmanning the MW worker position with deportation. Their weakness in being able to negotiate a higher salary is because they are poor, probably not well educated or doesn’t otherwise have that much bargaining power to begin with because they’re easily replaceable. That’s why unions are a good thing and why MW is a good thing.



    3) I'd be curious if you could explain the assumption behind your argument. Why would an increase in an artificial price hurting a company mean that company shouldn't exist? If we raised the price of wood to $1B/foot, a lot of companies would go out of business, why does that mean they shouldn't be in business?
    What do you even mean by “artificial price”? I feel this might be the crux of our differences. A price agreed upon by a group is not artificially created - it is discussed and organized and presented and enforced. Just as if one were negotiating with a single worker - the group pricing is done for millions of workers. It’s more efficient.

    To your question: yes, it absolutely would. It happens in the real world when resources get scarce and prices have to go up and some businesses will have to fold because they can no longer rely on the original price. It’s the same with labor: it happens all the time in technology - tech resources for hot tech is very expensive. Those that cannot afford it produce worse products and die. Same with MW workers - if your business relies on paying people poorly and that resource at that price goes away then that’s just the natural economic forces working. There should be no problem with that.


    To phrase it a different way, why does your arbitrary wage number reflect on their solvency?
    I don’t see why it it arbitrary if it is thought through and discussed openly in government or negotiated by the union.

    The wage reflects how much labor costs so obviously it reflects on their solvency. It’s a fixed cost that needs to be factored in. Besides, this is a red herring - there aren’t any MW raises that don’t just skim off existing profits so I don’t see any real issues in this regard.

    — I’ll answer the rest later but I feel these are our core differences.
    Last edited by SharmaK; January 30th, 2018 at 03:41 PM.

 

 
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