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InvisibleEvolving
Resident Cynic

Registered: 10/01/02
Posts: 5,385
Loc: Apt #6, The Village
Minimum Wage Revisited
    #2541587 - 04/09/04 12:44 AM (12 years, 10 months ago)

If raising the minimum wage will raise the standard of living and the plight of the working poor, why stop with single digit or even double digit percentages? Why not attempt to raise their standard of living to be middle class or even that of the wealthy?

These are some questions that have been previously raised by me on this board but never clearly answered. Please refrain from anti-capitalist or anti-statist rhetoric and try to give cogent answers that display some analysis of the questions. I'd like to stay on this SPECIFIC topic. This is NOT about CEO's salaries, if you would like to discuss that, please start another thread. This is not about so called 'wage slaves,' if you would like to discuss that, please start another thread. This is about the analysis of a specific legislative action, it's effects and consequences. I would like intelligent/direct replies to the specific questions.

1) Assuming that legislating a higher wage of say... $12.00 per hour is good, isn't legislating an even higher wage of $350.00 per hour good as well? (yes or no)

2) If legislating a minimum wage of $350.00 per hour is bad, why is it bad?

3) What are some of the normally ignored and unstated consequences of raising the minimum wage?


--------------------
To call humans 'rational beings' does injustice to the term, 'rational.'  Humans are capable of rational thought, but it is not their essence.  Humans are animals, beasts with complex brains.  Humans, more often than not, utilize their cerebrum to rationalize what their primal instincts, their preconceived notions, and their emotional desires have presented as goals - humans are rationalizing beings.


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Invisiblesilversoul7
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Re: Minimum Wage Revisited [Re: Evolving]
    #2541645 - 04/09/04 12:58 AM (12 years, 10 months ago)

I'm not necessarily against minimum wage, but it doesn't need to be raised.


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"It is dangerous to be right when the government is wrong."--Voltaire


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Offlinephi1618
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Registered: 02/14/04
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Re: Minimum Wage Revisited [Re: Evolving]
    #2542595 - 04/09/04 09:48 AM (12 years, 10 months ago)

I think the minimum wage is a good thing, though there are sacrifices involved with having one, and raising it substantially is probably a bad idea.


The purpose of the minimum wage is to ensure that the working poor can maintain a minimally acceptable stadard of living.

The minimum wage has the side effects of increasing unemployment and discouraging investment, whether new businesses, building factories, etc.
Increasing the minimum wage applies inflationary pressure.


Talking about a $350 minimum wage serves no purpose but rhetorical. Nobody wants to do this. :rolleyes:

A minimum wage of $350, suddenly implemented, would lead to massive capital flight, inflation, massive layoffs, sudden increase in the cash economy, and general economic chaos. However, a slower implementation (say, hiking the minimum wage 5% a year until it reached $350) would not be nearly as bad, though still probably a bad idea.

The first article to come up when searching for "minimum wage concequences" on google is "The Consequences of Doubling the Minimum Wage in Indonesia". The conclusion of this article is that a real doubling of the minimum wage during the 90s led to an increase in the average wage of 10%, an increase in unemployment of 2%, and a decrease in investment of 5%.




Edit: Ok, I just looked at the communist thread. I didn't understand where this was coming from before, and assumed that you wanted to repeal the minimum wage.


Edited by phi1618 (04/09/04 10:57 AM)


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OfflineEkstaza
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Re: Minimum Wage Revisited [Re: Evolving]
    #2542860 - 04/09/04 11:25 AM (12 years, 10 months ago)

This is just my theory. It makes sense to me. It cannot be applied to any one industry or specific job. It is simply meant to describe the relationship between employers as a whole and employees as a whole, as it pertains to minimum wage.

I believe that minimum wage will always be proportionate to the cost of living just above the poverty level. It's part of our system of checks and balances. Any costs of the employer is going to be passed on to the consumer who inevitably is going to be the employee. As long as there is some system that prohibits the employer from paying the employee less than is needed to pay for what he/she consumes, then, theoretically, everybody gets an equal chance to survive fiscally. Note that I said survive and not prosper.


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OfflineMetaShroom
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Re: Minimum Wage Revisited [Re: phi1618]
    #2545941 - 04/10/04 05:45 AM (12 years, 10 months ago)


The minimum wage has the side effects of increasing unemployment and discouraging investment, whether new businesses, building factories, etc.
Increasing the minimum wage applies inflationary pressure.

There is no evidence that it does any of these things. A minimum wage was recently introduced in the UK -  investment and growth rose, and inflation and unemployment fell.


Talking about a $350 minimum wage serves no purpose but rhetorical. Nobody wants to do this. :rolleyes:

Exactly - the minimum wage is about raising the lowest wage with respect to the average wage. Talking about raising it above the average wage is nonsensical.


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InvisibleEvolving
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Registered: 10/01/02
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Loc: Apt #6, The Village
Re: Minimum Wage Revisited [Re: phi1618]
    #2546750 - 04/10/04 02:48 PM (12 years, 10 months ago)

Quote:

phi1618 said:
The purpose of the minimum wage is to ensure that the working poor can maintain a minimally acceptable stadard of living.



Yes, this is the stated purpose. Raising the minimum wage increases upward pressure on higher level wages as well and the effects can be negated by this as well as other unintended consequences. I am not aware of any study which has shown that raising it will raise people out of poverty

Quote:

The minimum wage has the side effects of increasing unemployment and discouraging investment, whether new businesses, building factories, etc.
Increasing the minimum wage applies inflationary pressure.



True.

Quote:

Talking about a $350 minimum wage serves no purpose but rhetorical.



The purpose is to get answers, direct answers.

Quote:

Nobody wants to do this.



Apparently nobody who advocates raising the minimum wage.

Quote:

A minimum wage of $350, suddenly implemented, would lead to massive capital flight, inflation, massive layoffs, sudden increase in the cash economy, and general economic chaos. However, a slower implementation (say, hiking the minimum wage 5% a year until it reached $350) would not be nearly as bad, though still probably a bad idea.



Agreed. The differences between raising the minimum wage to $12 as opposed to $350 is one of degree, but the economic principles at work are the same.


--------------------
To call humans 'rational beings' does injustice to the term, 'rational.'  Humans are capable of rational thought, but it is not their essence.  Humans are animals, beasts with complex brains.  Humans, more often than not, utilize their cerebrum to rationalize what their primal instincts, their preconceived notions, and their emotional desires have presented as goals - humans are rationalizing beings.


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InvisibleEvolving
Resident Cynic

Registered: 10/01/02
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Re: Minimum Wage Revisited [Re: MetaShroom]
    #2546866 - 04/10/04 07:28 PM (12 years, 10 months ago)

Quote:

MetaShroom said:
There is no evidence that it does any of these things.



Yes there is, you just refuse to recognize it.

Quote:

A minimum wage was recently introduced in the UK - investment and growth rose, and inflation and unemployment fell.



A single example does not establish a rule and correlation does not necessarily establish causation. It is faulty economic reasoning to ignore the myriad of other factors which come into play in this particular case. If there is overall economic growth when the minimum wage (or wage hike) is introduced, it could very well work to hide the negative consequences. It could also be that the minimum wage established is so low that the number of people affected by it is insignificant.

Quote:

Talking about raising it above the average wage is nonsensical.



It is not any more nonsensical than talking about raising the minimum wage to $12 per hour. I was requesting the respondents address the economic principles involved. You still have not answered ANY of my questions. Could it be that some do not want to talk about this because they lack the requisite understanding of economics? Or is the avoiding of the questions and dismissing them out of hand a sign of intellectual dishonesty? Probably both.

When you raise the minimum wage you raise the cost of employing people, you also raise the cost of unemployment insurance, unemployment compensation and social security taxes. How are increased costs recouped? One way is by raising the prices of goods and services produced at entry level wages. What happens when the costs of goods and services rise? People have less disposable income.

Higher minimum wages also lower the relative cost of automation. If an employer cannot afford to pay the higher wage, he will lay off people who have the least experience and the least amount of skills and/or terminate plans to hire more people and/or increase automation because it will give a better return on his investment. Who are most likely to be laid off? Entry level or low skilled workers. Who will benefit the most? Those who have the most experience or skills or those who are engaged in the process of automation.

The benefits produced from a higher minimum wage are at best, transitory. As the actors in the market adjust their behaviors to accommodate higher wages the benefits will disappear, either through higher prices of goods and services (thereby negating wage increases) or cuts in the number of those employed through outright layoffs, lack of new jobs or automation.

Now, can you at least try to answer my questions, or are dodges all that I can expect?


--------------------
To call humans 'rational beings' does injustice to the term, 'rational.'  Humans are capable of rational thought, but it is not their essence.  Humans are animals, beasts with complex brains.  Humans, more often than not, utilize their cerebrum to rationalize what their primal instincts, their preconceived notions, and their emotional desires have presented as goals - humans are rationalizing beings.


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Anonymous

Re: Minimum Wage Revisited [Re: Evolving]
    #2546948 - 04/10/04 08:09 PM (12 years, 10 months ago)

:thumbup:


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InvisibleXlea321
Stranger
Registered: 02/26/01
Posts: 9,134
Re: Minimum Wage Revisited [Re: MetaShroom]
    #2547836 - 04/11/04 02:50 AM (12 years, 10 months ago)

There is no evidence that it does any of these things. A minimum wage was recently introduced in the UK - investment and growth rose, and inflation and unemployment fell.

Sshh...you're not supposed to mention facts and evidence. That just confuses things. Stick to fantasies and theories you've picked up in "libertarian" pamphlets.


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Anonymous

Re: Minimum Wage Revisited [Re: Xlea321]
    #2548836 - 04/11/04 05:23 PM (12 years, 10 months ago)

did you miss evolving's response?


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InvisibleEvolving
Resident Cynic

Registered: 10/01/02
Posts: 5,385
Loc: Apt #6, The Village
Re: Minimum Wage Revisited [Re: ]
    #2548955 - 04/11/04 07:13 PM (12 years, 10 months ago)

Merely reading the words isn't enough, comprehension is required.


--------------------
To call humans 'rational beings' does injustice to the term, 'rational.'  Humans are capable of rational thought, but it is not their essence.  Humans are animals, beasts with complex brains.  Humans, more often than not, utilize their cerebrum to rationalize what their primal instincts, their preconceived notions, and their emotional desires have presented as goals - humans are rationalizing beings.


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InvisibleXlea321
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Posts: 9,134
Re: Minimum Wage Revisited [Re: ]
    #2550029 - 04/12/04 03:46 AM (12 years, 10 months ago)

did you miss evolving's response?

Facts will always be more valid than "evolvings response".


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Anonymous

Re: Minimum Wage Revisited [Re: Xlea321]
    #2550419 - 04/12/04 07:36 AM (12 years, 10 months ago)

Facts will always be more valid than "evolvings response".

evolvings response contains facts. if he is mistaken in any of his assertions, and they are not indeed "fact", could you perhaps provide some 'facts' of your own to show why?


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InvisibleXlea321
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Re: Minimum Wage Revisited [Re: ]
    #2550431 - 04/12/04 07:52 AM (12 years, 10 months ago)

Quote:

Metashroom posted:

There is no evidence that it does any of these things. A minimum wage was recently introduced in the UK - investment and growth rose, and inflation and unemployment fell.





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Anonymous

Re: Minimum Wage Revisited [Re: Xlea321]
    #2550593 - 04/12/04 10:24 AM (12 years, 10 months ago)

to which evolving responded:

"A single example does not establish a rule and correlation does not necessarily establish causation. It is faulty economic reasoning to ignore the myriad of other factors which come into play in this particular case. If there is overall economic growth when the minimum wage (or wage hike) is introduced, it could very well work to hide the negative consequences. It could also be that the minimum wage established is so low that the number of people affected by it is insignificant."

effective price floors create surplusses. the supply and demand of labor interact to set wages. when wages are artificially set higher than this market rate, there will be a disparity between supply and demand for labor. there will be a greater supply than is demanded, and the result will be unemployment.

what evolving has said is true; a minimum wage will create unemployment. there are other competing variables that may result in overall decreased levels of unemployment occuring at the same time as the introduction or increase in a minimum wage, but this does not negate the basic economic principles involved. absent a minimum wage, unemployment would have fallen even faster in the UK in that time period.


Edited by Anonymous (04/12/04 11:49 AM)


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InvisibleXlea321
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Re: Minimum Wage Revisited [Re: ]
    #2550880 - 04/12/04 12:42 PM (12 years, 10 months ago)

But realistically, what else is he going to say? If reality doesn't fit the fantasy of course there'll be a "reason" why it didn't. Osama Bin Laden might say it didn't happen because it was the will of Allah, an astrologist might say it was because jupiter wasn't in the right quadrant. I prefer to deal with the facts rather than fantasies of why reality didn't map out to personal belief systems.

BTW, if unemployment had increased after the introduction of the minimum wage in Britain do you think he'd be saying "There could be myriad other factors to explain the increase in unemployment"?

absent a minimum wage, unemployment would have fallen even faster in the UK in that time period.

Evidence? Give me facts. Not supposition and fantasy.


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InvisibleEvolving
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Registered: 10/01/02
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Re: Minimum Wage Revisited [Re: Xlea321]
    #2550923 - 04/12/04 12:55 PM (12 years, 10 months ago)

Quote:

Alex123 said:
But realistically, what else is he going to say?



How about you being realistic and address the points I have brought up? Care to address all my questions and demonstrate to us your superior understanding of economics? Care to refute the comments I made on a one by one basis and offer a cogent explanation for each refutation?

Quote:

BTW, if unemployment had increased after the introduction of the minimum wage in Britain do you think he'd be saying "There could be myriad other factors to explain the increase in unemployment"?



Yes Alex, I would say that there could be a myriad of factors which contribute to unemployment, an increase in the minimum wage being one of them. Other factors could include government regulation, licensing, fees, mandatory insurance, taxes, automation, moving of jobs to more favorable business climates, boom and bust cycles created by fiat money and the manipulation of the money supply, inability of British industry to adapt to changing technology and economic demands, the deteriorating state of Britain's public education system (we do witness an example of that on this forum - apologies to Edame and others to whom this does not apply), etc.


--------------------
To call humans 'rational beings' does injustice to the term, 'rational.'  Humans are capable of rational thought, but it is not their essence.  Humans are animals, beasts with complex brains.  Humans, more often than not, utilize their cerebrum to rationalize what their primal instincts, their preconceived notions, and their emotional desires have presented as goals - humans are rationalizing beings.


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OfflineGernBlanston
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Re: Minimum Wage Revisited [Re: Evolving]
    #2555755 - 04/13/04 06:53 PM (12 years, 10 months ago)

The inherent problem here is that you seem to be going under the assumption that economics is an absolute science. You have asked for specifics and numbers and references to studies, but you see... economics is entirely theoretical.

You can think all you'd like about how a system will behave when you introduce new economic principles, but this is not a quantum dynamic; economics is chaos theory, pure and simple. It will always adhere to a general set of parameters within a system, but can never be predicted. The only way to "know" what will happen to the poverty level by raising the minimum wage is to actually raise the minimum wage and see what happens.

It's not really any different than asking someone to explain to you within <n> degree of certainty which way a flock of birds will go when you throw a rock into thier formation.

Of course, I've been wrong before.


--------------------
There is no flag large enough to cover the shame of killing innocent people.
  --  Howard Zinn


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InvisibleEvolving
Resident Cynic

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Re: Minimum Wage Revisited [Re: GernBlanston]
    #2556008 - 04/13/04 07:23 PM (12 years, 10 months ago)

Quote:

GernBlanston said:
The inherent problem here is that you seem to be going under the assumption that economics is an absolute science.



Huh? How did you arrive at that conclusion? I know that I have not covered every possible reason or avenue of human action, and I have not claimed that I have done so.

Quote:

economics is chaos theory, pure and simple.



No it isn't. To the extent that we cannot predict the individual strategies of all economic actors to changing circumstances (such as government intervention), there is value in considering chaos theory in economics. However, to state that economics is chaos theory is what is known as 'over simplification.'


Would you care to address my questions?

It is a simple fact of running a business, that people will tend to try to maximize profits and minimize losses, they will react to increases in costs by changing their daily operations, prices, expenditures, hiring practices and/or overall business strategies. If they do not do this, they are in danger of going out of business and hence anyone working for them will lose their job. Do you deny this? Feel free to address specific points I have brought up and explain why I may be mistaken or to add input.

If you care to tell us how you as an employer would handle forced increases in employment expenses for unskilled and entry level workers and explain the ramifications for your business operations, that would be helpful.


--------------------
To call humans 'rational beings' does injustice to the term, 'rational.'  Humans are capable of rational thought, but it is not their essence.  Humans are animals, beasts with complex brains.  Humans, more often than not, utilize their cerebrum to rationalize what their primal instincts, their preconceived notions, and their emotional desires have presented as goals - humans are rationalizing beings.


Edited by Evolving (04/13/04 08:06 PM)


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Anonymous

Re: Minimum Wage Revisited [Re: GernBlanston]
    #2556116 - 04/13/04 07:35 PM (12 years, 10 months ago)

You can think all you'd like about how a system will behave when you introduce new economic principles, but this is not a quantum dynamic; economics is chaos theory, pure and simple.

this is why the basic tenets of economics are usually qualified by the statement, "all else being equal..." (the latin, ceteris paribus is often seen).

for example, one would say that 'all else being equal, a price floor set above the equilibrium price will create surplus supply'.

It will always adhere to a general set of parameters within a system, but can never be predicted.

it cannot be predicted precisely because there are too many variables. there are many forces acting at once. isolated forces can however, be understood as parameters within a system, such as how supply and demand interact to set a market price. we can understand how supply and demand work and we can predict what will happen if the supply or demand should shift.

for example, we can predict that if there was a bountiful coffee bean harvest, the increased market supply of coffee would mean the price would drop while the quantity demanded and supplied would increase.... but we better qualify that with the statement "all else being equal" because if coffee was also, in that same time frame, discovered to be a potent carcinogen, then our prediction might not come true.

The only way to "know" what will happen to the poverty level by raising the minimum wage is to actually raise the minimum wage and see what happens.

actually this is a terrible way to 'know' what the effects of the minimum wage would be. thrown in with a slew of other variables, inseperable from other market forces, we could not see exactly what effect the minimum wage had.

it takes a lot more observation than one experiment to determine anything. the theory of how supply and demand interact to set quantity and price is consistant with what would logically be expected and with hundreds of years of observation. it is one of the bedrock foundations of economics. prices are set by supply and demand. the price for labor is set by the supply and demand for labor. all else being equal, artificially setting the price of labor above its natural equilibrium price will result in a labor surpluss (unemployment).


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