WuTangForeva

Of the 9.5% unemployment, who is hurt the most? Low-skilled workers whose competitive market wage is below $7.25 or whatever your state's minimum wage is. (In my home state I think it's high as eight-something!)

Businesses are always willing to take workers in -- labour can always be used -- it's simply a matter of the cost of that labour.

And as long as the minimum wage remains high, workers whose wage rate is valued below that of the current artificial price floor remain unemployed or underemployed. They get shorter hours: which sounds like a better option? 15 hours a week at $7.50/hr, or 40 hours a week at $6.25? (Oh let's not forget that overtime pay requirement which makes employers cut labour when they otherwise wouldn't -- why not a right to refuse to do underpaid overtime, thereby driving the market overtime wage rate up?)

This affects both students and the working class alike. There are many times this summer I would have been willing to take a job below minimum wage because otherwise I'd have been underemployed. There are many people probably stuck in a rut because they simply are not employed enough to gain the experience they need to raise their market wage above minimum wage level to be employed. On-the-job-training that would raise wage levels of the trainees never happens because of the minimum wage.

How can young people like you all support such an economically-damaging scheme?

(For those that talk about a living wage, there are many ways to drive wage prices up, in an economically productive way other than a price floor which results in deadweight loss. Consider government-subsidised job training, among other alternatives.)

peter_parker

Have you considered, oh economic master, that this would lead to worker competition that would drive wages increasingly down. He who works for the least gets the job.

WuTangForeva

Well below the minimum wage yes. That's the entire point. It's an efficient point, from which workers can then gain skills and experience to drive the wage rate upwards. Productively, not artificially. As a whole, the economy will pay more wages since there is more labour being employed.

One of the big issues is that with a minimum wage, businesses can barely afford to impose a wage differential on hourly labour ... and then, why work hard? Why promote?

(Not to mention the fact you know, that with a minimum wage, businesses can't afford to cut back on prices to stimulate demand; consumers pay for overpriced goods and everyone loses.)

Vehicle

Wait, what? So you're saying in order for everyone to become gainfully employees, business should be allowed to set their own wage regulations? For one, that's on the border of slave labor if there are no regulations. Of course there will be desperate individuals that will accept $1.50/hr thus monopolizing the workers market. Maybe since you're still in school you don't understand the living costs needed to support an independent life. Minimum wage BARELY cuts it. I'm sure you'd love to see less fortunate children suffer because their parents are forced to take jobs that only pay $4.00/hr?

Minimum wage is not the problem in this recession. People are losing jobs due to cut backs of all positions, not just the working class scraping to get by. Businesses sell their products high and pay their workers low--it's called capitalism. You really think they are going to raise wages when they are allowed to substitute their own because their employees are more skilled? More skilled employees makes the market wage for skilled employees drastically go down. In the end, everyone will eventually accept lower wages.

hellojan

Okay, I've read and reread the original post. I can safely say that I have yet to hear or read a sensibly articulated argument against minimum wage laws.

rockermcr

If I had to choose one sentence to stand for the entirety of this thread, it would be:

AeroEngineer3141

The labor market would tank.

1. People will not work as often as they would if they were paid more (consumers are concerned about marginal utility just as much as the next firm). The number of people working extra jobs would be offset by the lost hours of the entire workforce as a whole.
2. Wages across the entire spectrum will fall as people accept jobs at lower wages.
3. Decreased income leads to decreased consumer activity, which leads to a weaker economy later on.

In addition, the government already allocates subsidies for the personal marginal utility of a worker. That's why colleges receive loans and such.

WuTangForeva

Why don't you ask your teachers what they think?

What's wrong with that?

It's not slave labor if you consent to being employed. You can quit at any time. You can negotiate. And honestly, very few workers will be willing to work for $1.50. Some workers who can't find a job will be willing to work for $6.50 -- and many workers will be experienced and highly useful and will maintain their previous wage rates (8/9/15 dollars an hour).

Tell me, how do they monopolise the workers' market? Furthermore, how useful would those desperate individuals be? Their market wage is low PRECISELY because their productivity is low. So what do you do? Bar them from working and prevent them from ever gaining useful experience? Those individuals prolly would be consigned to wiping trays at McDonalds or something -- no one would even trust them to run a grill. From THERE they could slowly work up to a decent position. Everyone wins.

I'm a low-income student, who's survived on food stamps (before I could work), am self-sufficient at this very moment, seen my single mother unemployed for years, etc. etc. so don't you tell me that I don't know economic hardship you rich little ****. Oh, my mother doesn't contribute to the funding of my education / lifestyle because I do it all myself. What about you?

WuTangForeva

What's your argument *for* minimum wage laws?

You need to analyse this more carefully. You're making many careless fallacies.

Price floors always lead to reduced quantity traded -- in this case, hours worked. Remember? Price floors do not raise quantity transacted because Q_s < Q_d, and quantity transacted is always the lesser of the two. Q_d falls naturally but Q_s rises, and as long as the floor price is above market price, Q_s < Q_d so Q_s is always the "rate-limiting component". Total work hours rises with the abolishment of the minimum wage.

This isn't quite true. I'm not sure if you failed your macroecon class, but income of the whole economy increases (GDP increases); average income rises because unemployed individuals are now earning income. In addition, businesses can now produce more because the economy is restored to full employment. Income of previously-employed individuals may decrease, but prices of goods and services decreases because resource costs (wages) have fallen AND there are now more workers working (productivity increases). Essentially, you can now buy more with less income.

WuTangForeva

Oh, but wait, those parents are unemployed because the minimum wage is too high. The children can't get any work experience (this was my problem) because ... their initial productivity is low and they can't even get training on the job because the minimum wage is too high.

You don't even have your equilibrium wage rates correct. The average market wage rate 10 years ago was 4.50 / hr. By estimation, it's around $6.20 now. Without a minimum wage businesses can afford to impose a wage differential -- businesses can now pay less productive workers less, allowing them in fact to reward productive, hardworking parents with an hourly rate far above the average wage!

Oh, have you seen those lazy hourly hoodlums who do a half-ass job at work because they know it doesn't pay? Ever had one of them for a coworker? That's right, cuz at minimum wage, everyone gets paid the same and a lazy worker gets paid as much as a productive worker. (Or maybe the productive worker gets paid 15 cents higher than a lazy one -- businesses can't afford to do anything else.) Productivity falls and costs increase. This means less goods and services get produced. This means real prices rise. You think have "additional income" but it actually buys less.

Take care of families with increase in TANF funding; give families scholarships based on how their children do at school; if you abolish / reduce the minimum wage, tax revenue increases (because total wages paid increases AND total profit increases -- both workers and employers win) which you can use to fund better welfare.

WuTangForeva

In a competitive labor market, businesses are price takers, not price makers. You should be able to see why. Yes, businesses should be allowed to set their own wages. So should workers! It's called *gasp* negotiation.

I should also be able to want to work at a lower wage if I ****ing want to. Why force a higher wage upon someone, when it results in his being unemployed and a loss in job training?

10jarsle

I am generally against virtually all regulation of business as a matter of principle. However, a reasonable minimum rage (not outrageous, but reasonable) can be beneficial if used properly and not politically. However, this is virtually impossible in the current system, where there is a tremendous incentive for minimum wage earners to elect politicians who will increase their pay. Thus, I would favor tying the minimum wage to inflation. That said, it is important to remember that government intervention is a necessary evil, and the minimum wage does little to solve the underlying problem which is low productivity... it is a way to mitigate poverty, but by no means should it ever be considered a solution... even if it is increased far above current levels.

WuTangForeva

How does the minimum wage benefit those who earn it? I argue that it in fact, hurts everyone. It hurts the wage-scale wage differential, it hurts productive workers; it hurts lower-productivity workers who are prevented from being hired (they COULD be productive, just that they aren't worth $7.50/hr, and they could LEARN to be more productive on the job).

Does a minimum wage really increase the pay of the poor? Prices go up because of the minimum wage (labor costs increase) by itself, and then the unemployment caused by the minimum wage reduces economic output (prices go up again) -- double whammy for the employers and the workers. If your wage goes up 20% cuz of minimum wage, but everything costs 30% more, you really have benefited, haven't you?

Prices and money are just a way to communicate information about what is efficient and what isn't, how to allocate goods. If people are unemployed because of the minimum wage, less is being produced and everyone is poorer. Some people forget basic principles of accounting. Would you earn more if half the nation disappeared? After all, less competition for labor, right? but you forget competing workers produce too and if they didn't exist, you'd be worse off

LogicWarrior

amateur economist thread oh boy!

also it's a lot better to work for low wages than to not have a job

WuTangForeva

I'm not being an amateur economist.

I'm being a citizen you know, and a student, who is affected by the idiocy of fellow citizens (and fellow students) who support this measure? And I trust a lot of us have experience with hourly labour.