reducing/abolishing the minimum wage would be the quickest ticket to recovery

College Confidential Community
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<p>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!) </p>

<p>Businesses are always willing to take workers in – labour can always be used – it’s simply a matter of the cost of that labour. </p>

<p>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?) </p>

<p>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.</p>

<p>How can young people like you all support such an economically-damaging scheme? </p>

<p>(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.)</p>

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<p>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.</p>

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<p>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.</p>

<p>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?</p>

<p>(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.)</p>

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<p>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?</p>

<p>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.</p>

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<p>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.</p>

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

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<p>The labor market would tank.</p>

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<li>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.</li>
<li>Wages across the entire spectrum will fall as people accept jobs at lower wages.</li>
<li>Decreased income leads to decreased consumer activity, which leads to a weaker economy later on.</li>
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<p>In addition, the government already allocates subsidies for the personal marginal utility of a worker. That’s why colleges receive loans and such.</p>

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<p>Why don’t you ask your teachers what they think?</p>

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<p>What’s wrong with that?</p>

<p>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). </p>

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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. </p>

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<p>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?</p>

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<p>What’s your argument <em>for</em> minimum wage laws?</p>

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<p>You need to analyse this more carefully. You’re making many careless fallacies.</p>

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

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<p>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.</p>

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<p>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.</p>

<p>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!</p>

<p>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.</p>

<p>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.</p>

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<p>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 <em>gasp</em> negotiation. </p>

<p>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?</p>

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<p>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.</p>

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<p>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). </p>

<p>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?</p>

<p>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</p>

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<p>amateur economist thread oh boy!</p>

<p>also it’s a lot better to work for low wages than to not have a job</p>

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<p>I’m not being an amateur economist. </p>

<p>I’m being a citizen you know, and a student, *who is affected by the idiocy of fellow citizens<a href=“and%20fellow%20students”>/i</a> who support this measure? And I trust a lot of us have experience with hourly labour.</p>

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<p>correction: unemployment stands at 9.8% not 9.5%</p>

<p>Clearly a price floor in the labour market has nothing to do with it amirite</p>

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<p>So you’re basically saying if someone does not want to accept lower wages than they are out of a job because they cannot compete with those that accept these wages? Slave labor in a more modernistic term, does not always refer to actual act of slavery but the act of taking advantage of cheap labor. Most people do not have a choice to stay home or a choice to look for jobs with higher pay thus pushing them into employment that does not fit their needs. I’d call that slavery.</p>

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<p>So are you also incriminating yourself in saying that your productivity is low because you are willing to accept below minimum wage? Everyone strives to work to a decent position and it can start at a minimum wage. If there is no wage regulations than those that get better positions will STILL be undercut due to the influx of opportunity. It’s not impossible to get a job and work up in the world. Businesses don’t NEED that many employees even if they could get them cheap. There is a shortage of jobs simply because work isn’t necessarily needed.</p>

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<p>This is absolutely hilarious that you assume I’m some rich kid with parents made of money because I’ve pointed out what an ignorant kid you are. My parents are in no way rich, in fact, their income skims the poverty line. The difference between you and me is that I actually worked to get up in the world. I make quadruple what my parents make and well enough to support myself and a family if I choose. I certainly didn’t get that way by accepting mediocre jobs and vouching for less wages. Hell, my wages are higher than other individuals in my field because I feel that I deserve more.</p>

<p>I make enough to pay for my college tuition IN FULL in less than two months. All on my own independence. For the reference.</p>

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<p>Hmm, here’s an idea, why don’t you get a job that doesn’t have hourly if you’re so upset about earning as much as your lazy coworkers. I’m self employed for that reason.</p>

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<p>Oh man, China would love you kid ;)</p>

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<p>I’m actually in favour of raising minimum wage.</p>

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<p>We have something called the internet, which changes the traditional market dynamic considerably (you know, after factoring unions and all that).</p>

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<p>I’m glad you’re entrepreneurially talented. Nevertheless, your understanding of basic macroeconomics is lacking.</p>

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<p>My productivity w/regard to that position, yes. If I am not beneficial enough to the firm to be worth that much, then I aim lower. Now actually my wage is quite higher (I was looking for a summer job) – and herein lies the catch: with regards to summer employment, productivity is lower because I’d be leaving in a short period, so naturally any human capital gained on the job would be worth less to them.</p>

<p>Now some firms are quite unreasonable and other firms would be willing to pick up productive workers other firms have rejected – it is called competition.</p>

<p>I thought of running my own (food) business, since I am quite a good cook, but I don’t have transport and don’t have a market. I must be more secure first before I start making investments. </p>

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<p>Do you know what money is? Money is money. It is not a good or service. If total economic output decreases to support a minimum wage, everyone is poorer off and your higher wages won’t have made a difference. Money simply is a mechanism to communicate information about allocation and efficiency.</p>

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<p>It’s often impossible with a minimum wage. Businesses will simply not hire workers who are less productive than minimum wage – they will incur a loss with those workers, even if they need labour that would increase their output or standard of service.</p>

<p>Also, I don’t know what you ever got in your economics classes but human labour is always useful – there is never a shortage of labour resources, but always a scarcity. What prevents firms from hiring more labour? Labour costs. With lowered marginal labour costs, firms can expand output, get more machines, hell, for the time being use them to peddle goods on the roadside (if say, labour were cheap). However, the cost of labour generally prevents them from using labour inefficiently. </p>

<p>Please, address the fact that:
Total wages paid goes up
Deadweight loss is eliminated
Economic output is increased and therefore real wealth is increased (prices fall; consumers have more purchasing power)
Differential pay scales can be implemented, improving productivity further</p>

<p>Oh, what school do you go to by the way? I made my entire EFC in the last month, too.</p>

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<p>Why do you think that would actually increase the buying power of the poor? </p>

<p>Do you support rent controls as well? </p>

<p>I know, you support protectionism, right?</p>