[Discussion] What is the argument against raising minimum wage?

[Multiply]

As the title says. I can't really think of any that aren't easily defeated. :flakez:

 

[Pirate King]

all of them are retarded

 

[Joker]

Business Owner: I lose more money, and I really wanted to buy that private jet!

 

[Aim64C]

As the title says. I can't really think of any that aren't easily defeated. :flakez:

Minimum wage was initially proposed back in the early 1900s as a means of preventing migrant tradesman from other countries 'stealing the jobs' of 'proper' people/citizens. This was its original purpose.

You can hire the man who is still trying to learn English and may have inconsistent access to various forms of hygiene supplies...

Or, you can hire the man who was born and raised here and who comes from an established network of family support. All for the same price.

Who are you going to hire?

Realistically - you're going to hire the superior of the two.

From an economic standpoint, minimum wage serves to increase the base cost of living in a region. Labor costs are embedded into every stage of the economy. An increase in minimum wage is not just an increase in costs for the food service employee at the register, it is also an increase for the person who baked the bread, who delivered the bread, who manufactured the packaging to seal perishables - and so on, and so forth. A 10% increase in minimum wage can generate a 30% increase in product cost, depending upon exactly how many stages are in the supply chain and their dependence upon minimum wage.

Minimum wage jobs tend to be most heavily involved with the supply of consumable items - grocery stores - food, toiletries, and other basic staples that individuals must consume simply to live in an area. This means that increases to minimum wage most directly correlate to increases in cost of living.

From a global trade standpoint, goods manufactured in an area with an increased cost of living tend to be more expensive. Since global trade tends to be highly competitive, profit margins on a product are often times less than 3%. This means that increases in product cost can not be absorbed by the industry and that their costs in the competitive market must be increased. Further, this means that labor costs that are above minimum wage even after the increase are unlikely to see an increase in pay. Again, increases in labor costs can't be absorbed by the industry and the costs to the customer must be increased, as well.

This places export businesses located within areas of increased minimum wage less competitive with those outside of those regions. This generally leads to a decrease of economic activity and a decrease of exports resulting in job lay-offs and industry closings.

In the end - people who used to be paid 3x minimum wage are now paid 75% more than minimum wage, have increased costs to deal with, and have a smaller discretionary budget while dealing with the threat of layoffs. This translates to less use of various services - fewer meals at restaurants, less spending upon convenience or luxury items at the store, and a general economic slow-down.

Further, the greater minimum wage becomes, the more attractive automation becomes. Despite all of the hype, automation is actually rather intimidating from a business standpoint. It is a structural investment that requires years to pay off and is not easy to change. There is a welcome simplicity to hiring a human who you can give simple instructions to and simply verify that they are completed to your satisfaction. If changes are to be made to how the business operates, people can be re-trained or can 'wing it' - something few automation setups allow for.

However, technology is advancing and there exist customer service robots that can guide people to sections automatically and can also network with video/audio feed to experts who can help with technical questions or "I brought this in, can you please help?" type questions. When you consider that these robots can replace multiple shifts of workers who can be late, get sick, not all sit atop the same expert advice, etc.... it's an attractive investment.

Increasing minimum wage is, blatantly, one of the worst things you could possibly do for the poor... or... people in general, for that matter.

 

[oShux]

The more money circulating in an economy, the less valuable it becomes. Thus creates inflation. And even if that doesn't happen, should minimum wage be increased, the government and the market will just increase the price of everything so it defeats the purpose. And a big factor that many people don't think about is this. All organizations have budgets, it's how they make profits, if a business has a budget of 100 dollars, and they're paying two employees 20 dollars a day(Just random numbers I'm using) then they're overall profit for the day would be 60 dollars. Should minimum wage be increased, and the business would have to pay their employees 40 dollars an hour, guess what? One of those guys are gonna get laid off. So basically, there will be less jobs available. I do believe minimum wage should be increased as there are many people without opportunities who actually have to pay bills and take care of their families, but I also believe it shouldn't be raised to a certain level. Plus whenever minimum wage is increased so does property value. Look at LA and NY.

 

[Yusuke Urameshi]

Inflation and the prices of everything will increase in proportion to the wage increase. I don't really see a reason to increase it. Sure, it sucks (my last job paid $7.35/hour), but increasing the minimum wage won't really do anything.

 

[Professor Finesser]

Minimum wage was initially proposed back in the early 1900s as a means of preventing migrant tradesman from other countries 'stealing the jobs' of 'proper' people/citizens. This was its original purpose.

You can hire the man who is still trying to learn English and may have inconsistent access to various forms of hygiene supplies...

Or, you can hire the man who was born and raised here and who comes from an established network of family support. All for the same price.

Who are you going to hire?

Realistically - you're going to hire the superior of the two.

From an economic standpoint, minimum wage serves to increase the base cost of living in a region. Labor costs are embedded into every stage of the economy. An increase in minimum wage is not just an increase in costs for the food service employee at the register, it is also an increase for the person who baked the bread, who delivered the bread, who manufactured the packaging to seal perishables - and so on, and so forth. A 10% increase in minimum wage can generate a 30% increase in product cost, depending upon exactly how many stages are in the supply chain and their dependence upon minimum wage.

Minimum wage jobs tend to be most heavily involved with the supply of consumable items - grocery stores - food, toiletries, and other basic staples that individuals must consume simply to live in an area. This means that increases to minimum wage most directly correlate to increases in cost of living.

From a global trade standpoint, goods manufactured in an area with an increased cost of living tend to be more expensive. Since global trade tends to be highly competitive, profit margins on a product are often times less than 3%. This means that increases in product cost can not be absorbed by the industry and that their costs in the competitive market must be increased. Further, this means that labor costs that are above minimum wage even after the increase are unlikely to see an increase in pay. Again, increases in labor costs can't be absorbed by the industry and the costs to the customer must be increased, as well.

This places export businesses located within areas of increased minimum wage less competitive with those outside of those regions. This generally leads to a decrease of economic activity and a decrease of exports resulting in job lay-offs and industry closings.

In the end - people who used to be paid 3x minimum wage are now paid 75% more than minimum wage, have increased costs to deal with, and have a smaller discretionary budget while dealing with the threat of layoffs. This translates to less use of various services - fewer meals at restaurants, less spending upon convenience or luxury items at the store, and a general economic slow-down.

Further, the greater minimum wage becomes, the more attractive automation becomes. Despite all of the hype, automation is actually rather intimidating from a business standpoint. It is a structural investment that requires years to pay off and is not easy to change. There is a welcome simplicity to hiring a human who you can give simple instructions to and simply verify that they are completed to your satisfaction. If changes are to be made to how the business operates, people can be re-trained or can 'wing it' - something few automation setups allow for.

However, technology is advancing and there exist customer service robots that can guide people to sections automatically and can also network with video/audio feed to experts who can help with technical questions or "I brought this in, can you please help?" type questions. When you consider that these robots can replace multiple shifts of workers who can be late, get sick, not all sit atop the same expert advice, etc.... it's an attractive investment.

Increasing minimum wage is, blatantly, one of the worst things you could possibly do for the poor... or... people in general, for that matter.

/thread

 

[FitzChivalry Farseer]

In its most basic explanation, companies do not want to pay more for employees because they are always trying to make a profit.

The higher the minimum wage the less aisles that are open in Walmart.

You think the government can tell these companies to just bite down the towel and hire a bunch of people with high wages? These companies will just take their business elsewhere leaving more people unemployed.

Also higher minimum wages will hurt small businesses since they are barely starting and can barely make ends meet without having to pay a ridiculous amount of money to an employee they just hired.


The only way for an individual to be able to resolve this issue of minimum wage is for one to be completely independent of this minimum wage cycle. One can make money without having to work for others by getting a good education and becoming something better than just the average person. Or you could work at the oil rigs too

 

[GhostProject]

I was taught both that it will cause inflation and that it won't cause it absolutely, however, as we all know inflation will happen regardless thus the value of minimum wage will steadily decrease if nothing is done.

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apparently debunks most of the arguments against it, including the effect on small business, restaurants, and who actually works minimum wage jobs. It doesn't say anything about whether it will absolutely cause inflation itself, but there doesn't seem to be a consensus on the internet.

I think that there is nothing wrong with incremental increases to adjust for inflation. If nothing is done at least minimally, then minimum wage becomes worth even less than it was, guaranteed.

 

[Aim64C]

I was taught both that it will cause inflation and that it won't cause it absolutely, however, as we all know inflation will happen regardless thus the value of minimum wage will steadily decrease if nothing is done.

But where does inflation come from? How does it become so that the $1 I have today does not equal $1 of goods from ten years ago?

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apparently debunks most of the arguments against it, including the effect on small business, restaurants, and who actually works minimum wage jobs. It doesn't say anything about whether it will absolutely cause inflation itself, but there doesn't seem to be a consensus on the internet.

No, it doesn't debunk them.

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"Minimum Wage Mythbusters” is a section of the Department of Labor website that seeks to debunk arguments against raising the federal minimum wage. The webpage does not source the data it uses in “busting” the supposed myths about the minimum wage, but an internet search of the statistics found that most of them originate at the leftwing Economic Policy Institute, and happen to directly contradict research and data compiled by official government researchers and statisticians.

...

In the same response to the so-called myth that increasing the minimum wage cost jobs, the DOL notes, “more than 600 economists, seven of them Nobel Prize winners in economics, have signed onto a letter in support of raising the minimum wage to $10.10 by 2016.” The letter was released and touted by EPI, and included eight economists associated with EPI.

Conveniently, the DOL does not mention that a group of 500 economists, including four Nobel Prize winners, have signed onto a letter warning against raising the minimum wage.

In challenging the claim that raising the minimum wage would only benefit teens, the DOL states, “88 percent of those who would benefit from a federal minimum wage increase are age 20 or older….”

But according to the DOL’s own Bureau of Labor Statistics, 24.2% of minimum wage workers are between 16 and 19 years of age. In fact, according to the BLS, “Although workers under age 25 represented only about one-fifth of hourly paid workers, they made up about half of those paid the federal minimum wage or less.” The BLS also declares, “Minimum wage workers tend to be young.”

Once again it appears the DOL took this claim from EPI. A 2013 EPI “Economic Snapshot” claims, “88 percent of workers who would benefit from a higher minimum wage are older than 20.” The EPI’s 88% claim relies on EPI’s own analysis of Census and BLS survey data. Why the DOL would use the EPI’s analysis instead of asking its own BLS to analyze the survey data itself is odd to say the least. "

That DOL page is, basically, a page full of shills.

The trick is that it always must be argued in terms of incremental increase. If minimum wage were a fundamental means of improving prosperity, then why not bump it to $100/hour?

There used to be jobs in this nation where you were paid $1 an hour. Prices were much lower back then (the dollar was worth almost 4X as much), so it isn't the slave-wage it sounds like. These were part-time jobs that people took because they had free time to go and do something - like pump gas, wash windows, trim hedges, etc. They were basic tasks that, quite literally, anyone could do.

At that same time, there were jobs that paid $8 an hour in manufacturing. Not all of them, mind you, but they were available.

When minimum wage was first bumped to $2 or $3 an hour, the part-time anyone-can-do jobs went away. You pump your own gas, these days. You have to get out and wash your own windows or pay $10 to go through the automated car wash in back. The costs to YOU didn't change too much - but the service job wasn't just displaced by automation - it has become next to impossible to exist as an alternative to automation due to minimum wage.

The people in the factory are still paid $8 an hour.

Sure, decades later, factory wages may increase over time to around $10 an hour for labor and assistance work, but this is only marginally above minimum wage and, as if by some cruel magic, their wages are no longer worth as much as they used to be due to inflation - which is some mystical fundamental force as assumed by today's population that has been bred to accept it as a fact of all economies.

Yes, there have existed economies where there was no inflation. America used to be one. That changed in 1913 with the Federal Reserve and the implementation of the Federal Income Tax.

Anyway - if you were to suddenly increase minimum wage to, say, $15 or $20 an hour - even the liberal economic advisers would start screaming that it would be a problem.

Now, it will still do the same thing 5 years from now to raise the minimum wage, again, to make it $20 an hour, or so. It will still eliminate the same type of jobs and destroy the same aspects of the economy. Many things in life will become so expensive that there will be government relief programs targeted at them - tax credits, rebates, etc. Many corporations will only be able to exist, by this point, as contracted by the federal government.

This is part of the overall goal of liberal economics.

It isn't about how much you or I make. It isn't about our success or our prosperity. It is about whether or not we are doing what is deemed to be worth our time and effort. People making HD TVs is a waste of time and energy - they should be making solar panels, instead. You don't need to be washing windows in your free time, you need to be studying hard to become the doctor who will save the life of a Congressman's child (who gets bumped up the waiting list).

It's basically an alternative route to becoming the USSR. It is, economically, identical to the model used within the USSR.

I think that there is nothing wrong with incremental increases to adjust for inflation. If nothing is done at least minimally, then minimum wage becomes worth even less than it was, guaranteed.

Sounds like the real problem is inflation and the only way you can think of to solve it is to hold a gun to someone's head and tell them to pay their employees more.

Let's actually bother to understand how our economy works, shall we?

Please forgive the introduction to this video - skip the first minute if you wish:

[video=youtube;iFDe5kUUyT0]https://www.youtube.com/watch?v=iFDe5kUUyT0[/video]

When there was no such thing as a federally endorsed central bank and the nation operated upon gold and silver backed currency - there were localized times of inflation AND DEFLATION - the net effect was quasi-neutral. Banks, since they were also not reinforced with guarantees on their loans by federal programs ("bailouts"), could not engage in such extensive fractional reserve lending.

When the currency supply is simply numbers ("Fiat"), it is easy to guarantee a bailout for banks. When currency is gold or silver that must be mined and refined - it's much more difficult to simply promise to 'bail out' a bank if they make errors in loaning money.

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Increasing minimum wage will not solve the problem.

The only way to solve the problem is to get rid of the Federal Reserve, get rid of Federal Income Tax, and to return to a gold and silver backed standard of currency.

There really is no other alternative.

 

[Yubel]

Someone explain to me in max 5 sentences what the argument against raising the minimum wage is.

 

[Aim64C]

Someone explain to me in max 5 sentences what the argument against raising the minimum wage is.

If raising minimum wage was how you go about fixing problems in the economy, why not raise it to $100/hour? Or $1,000,000,000,000,000,000/hour - get ahead of inflation, for once.

The main argument for raising minimum wage is that inflation has offset the previous increases to compensate for inflation. How did the economy work for over 150 years without a minimum wage?

Really, if you want such a concise argument on an issue, then you can't really be considered valid in the discussion.

 

[Yubel]

If raising minimum wage was how you go about fixing problems in the economy, why not raise it to $100/hour? Or $1,000,000,000,000,000,000/hour - get ahead of inflation, for once.

The main argument for raising minimum wage is that inflation has offset the previous increases to compensate for inflation. How did the economy work for over 150 years without a minimum wage?

Really, if you want such a concise argument on an issue, then you can't really be considered valid in the discussion.

Raise it to where a person can get a little more comfortable life

 

[Aim64C]

Raise it to where a person can get a little more comfortable life

I explain why this is not possible in my posts above.

If you wish to make the argument of: "I am stupid and therefor need things explained in five sentences or less" then you can just be stupid and believe that you can vote yourself into wealth.

If you wish to actually understand the problem, its causes, and what is practical as a solution for it - then you are going to have to read more than five sentences.

The choice is yours, but the tendency of fools to be empowered in this nation is precisely why I will be starting a new one in the coming years.

 

[Babadook]

Raise it to where a person can get a little more comfortable life

Shouldn't he first produce the worth of his wage? I mean, I think I need 10000 dollars/month for the life I'd like to live, so what. But if everyone is paid what he/she thinks his/her life is worth, instead of what his/her work is worth, then economy won't keep up.

But I'm no expert on the topic ofc ~

 

[Yubel]

Shouldn't he first produce the worth of his wage? I mean, I think I need 10000 dollars/month for the life I'd like to live, so what. But if everyone is paid what he/she thinks his/her life is worth, instead of what his/her work is worth, then economy won't keep up.

But I'm no expert on the topic ofc ~

The government can raise their wage to where they get x amount which will be enough for them to live comfortably in ther current lifestyle. Atleast they won't struggle financially as much.

666th post!!!!

 

[Babadook]

The government can raise their wage to where they get x amount which will be enough for them to live comfortably in ther current lifestyle.

- As if the government was a supernatural entity that can rewrite the principles of the market...People rely too much on the government. Why not expect the government to invent immortality? Why not expect the gvt to raise life expectancy? I see the new law : 'from now on, everyone shall live for 100 yrs in the name of the law'. xd Then it turns out it's not working. Let's raise it to 110 yrs! Still not good...let's raise it to 120 yrs ...etc.

- But let's say they raise the wage to x. For how long will that cover the expenses of one's 'comfortable lifestyle' ? A day? A year? Then you raise it again ad infinitum.

- You don't work for the government, you work either for yourself or for your company. Why should the government tell you or the company how much your work is worth? It's just one step away from fixing the prices of products as well...Next day the government will say 'a banana is worth 1 dollar. A car is worth 1000. ' But that's not how it is. Market works on sell and demand. If I have 500 dollars and I want to buy a car for that, and I find a producer who sells cars for 500, why should I pay 1000?

Anyway, Aim64C will probably give a better explanation. I'm not necessarily against all kind of market regulation or government intervention, I'm just trying to point out arguments against raising the minimum wage. ((( I'm also not against social aid to those who lose their job or suffer an accident, but that's another question. )))

 

[Yubel]

- As if the government was a supernatural entity that can rewrite the principles of the market...People rely too much on the government. Why not expect the government to invent immortality? Why not expect the gvt to raise life expectancy? I see the new law : 'from now on, everyone shall live for 100 yrs in the name of the law'. xd Then it turns out it's not working. Let's raise it to 110 yrs! Still not good...let's raise it to 120 yrs ...etc.

- But let's say they raise the wage to x. For how long will that cover the expenses of one's 'comfortable lifestyle' ? A day? A year? Then you raise it again ad infinitum.

- You don't work for the government, you work either for yourself or for your company. Why should the government tell you or the company how much your work is worth? It's just one step away from fixing the prices of products as well...Next day the government will say 'a banana is worth 1 dollar. A car is worth 1000. ' But that's not how it is. Market works on sell and demand. If I have 500 dollars and I want to buy a car for that, and I find a producer who sells cars for 500, why should I pay 1000?

Anyway, Aim64C will probably give a better explanation. I'm not necessarily against all kind of market regulation or government intervention, I'm just trying to point out arguments against raising the minimum wage. ((( I'm also not against social aid to those who lose their job or suffer an accident, but that's another question. )))

No he won't, he either writes wall of texts or gives annoyingly complicated explanations.

 

[Babadook]

No he won't, he either writes wall of texts or gives annoyingly complicated explanations.

Here is a site with short videos and a list that sums up the pros and cons.

You must be registered for see links

 

[Aim64C]

The government can raise their wage to where they get x amount which will be enough for them to live comfortably in ther current lifestyle. Atleast they won't struggle financially as much.

666th post!!!!

There was a time when people would pump your gas and wash your windows for you at a gas station. Some would even go so far as to check your tire pressure and other such things. Just for getting gas.

Why did that go away?

Because minimum wage increased their price to exceed the value of the position.

Money is time and effort. The money you receive in a job is compensation for the time and effort expended to perform it. Minimum wage effectively makes time and effort more expensive. If the expense outweighs the time and effort, then people will simply do it, themselves.

Why pay $0.90 for a gallon of gasoline where someone pumps gas for you and washes your windows when you can simply do that, yourself, at the station that charges $0.54 for a gallon of gasoline?

You can't write laws that change the amount of time and effort that go into a job. If you force people to pay more for it than it is worth, it goes away. Just like cashiers are being replaced by self-checkout and automated ordering systems.