The thing that is wrong with our minimum wage stance,

[Strong Atheist]

and a way to fix it. I am going to be using my evil capitalist alter ego, just like Landshark uses an alter ego in the 2004 results forum.

As a special education teacher, I am conversant with the UNFUNDED MANDATE problem. An unfunded mandate is when a legislative branch of the government (usually the feds) makes a law that requires states or localities to spend money, but the legislating body gives no money, just the mandate to DO IT. A program is set in motion without the money (or without enough money) to fund it; the localities are forced to come up with more money on their own.

The minimum wage, as it has been implemented in the past, is an unfunded mandate. How? This is how it works. I am going to give three examples (all the same, only a matter of degree or size) so no one will say that minimum wage only affects certain sizes of employers.

I am going to suppose that I am in charge of (one at time) three different sizes of business: small, medium, and large. In all three cases, there are some basics involved.

First, I (as EVIL Strong Atheist) am of course an evil capitalist; I demand that I MAKE A PROFIT. If there is no profit, I will relocate or close up business. That is a given for me, EVIL Strong Atheist/capitalist.

Second, no matter my business size, or what I am producing/making/giving as a service, I have fixed costs (overhead). My facilities, rent, utilities, cost of materials, loans to pay back, employee insurance, employee health benefits, employee retirement benefits; all these things add up to regular expenses that have to be paid, just like an individuals' monthly mortgage, gas, heating, electric bill, etc.

In addition, I have competitors who will try to undersell me; I have to make sure that I can not raise my prices too much or business will go to my competitors.

So, with these givens, let us look at my costs to employ people. After all of my overhead costs, I have the following amounts that I can spend to employ people:

small business owner : $30 an hour total, full time employment
medium business owner: $300 an hour total, full time employment
large business owner : $3000 an hour total, full time employment

For purposes of this exercise, I am going to make two further assumptions that are not always true, but close enough in reality to show my point. The first is that minimum wage is currently $5 an hour (I KNOW it is $5.25; I could make the same arguments with that figure, I just wanted to make the math easier, ok?). The second assumption is that all my employee money is going to minimum wage workers; I am not paying anyone more than that because I am AN EVIL CAPITALIST who does not want to spend a dime more than I have to.

Ok, how many people can I employ?

As a small business owner, I have $30 dollars an hour to spend. The minimum wage is $5 an hour, so $30/$5 = 6 people. Cool. I hire my 6 peons to produce my widgets. As a medium sized business owner, I can hire $300/$5 = 60 employees. Fantastic! I stick them all in my sweatshop. As a large business owner, I can have $3000/$5 = 600 slaves in my massive factory!

Now, into my happy world, the government changes the rules on me suddenly. A new minimum wage law is passed! The new minimum wage is now $6 and hour. Note, my overhead expense are the same. My competitors are the same; if I raise prices they will undercut me, and I will lose business (and more important, MONEY). My desire to make the same profit I was making before is the same; the only thing that is different is the increase in the minimum wage; a cost to me that is not being offset by the government (an UNFUNDED MANDATE; it would be like if your salary did not change, but the price of gas and heating oil went up, you would be squeezed).

So now, how many people can I afford to hire? I still have $30, $300, and $3000 dollars an hour to spend on salaries.

As a small business owner, I have $30/$6 which equals 5 employees, instead of the 6 I had before. So I continue to pay 5 of my employees at $6 an hour (not much of a change in THEIR income), and fire one employee (1/6th of my work force). My business is hurting, and everyone has to do more work.

As a medium business owner, I can now hire $300/$6 = 50 employees. I fire 10 employees (1/6th of my work force), and pay the rest a pittance more ($6 an hour instead of $5).

As a large business employer, I have options. I can go from having $3000/$5 = 600 employees to having $3000/$6 = 500 employees, firing 1/6th of my work force. Or, I can get pissed at this sh** (I mean, they make me treat my slaves well with OSHA, tell me who I can and can't hire (with EEOC), make me clean up my messes (with EPA), and now they are adding another expense to my cost of doing business!). This is the last straw! So long, suckers, I am closing my business here and reopening in China, or Mexico, or India (because I have the MONEY to relocate), where I can hire 6000 people for $3000 dollars; and I don't have to have any of this other regulatory B.S.

***********************************************************************
No longer EVIL Strong Atheist/capitalist swine
***********************************************************************

How can this be fixed, so that minimum wage can be increased? My proposal is that the feds fund most or all of an increase with some combination of tax cuts to business to offset their increased expenses and/or handouts to business to make up the difference in cost of employment. This would require tax increases. One or both of these would offset the business losses due to increased cost of employment.

I am open to other ideas; just keep in mind that the business loss due to increased minimum wage is REAL.

Putting on my flame-proof suit .... and done! Fire away!

[dsc]

1. Your competator's costs are going up too

and you are discounting the fact that most businesses don't budget a certain amount for employees and then hire but that the determine the number of employees needed for a process and then hire. I highly doubt that employers would fire that many people if faced with a small hike in the minimum wage.

[Egalitariat]

2. With a small hike in the minimum wage you'd be right

Some people would lose their jobs, but not many. If you doubled the minimum wage, there'd be chaos.

[Strong Atheist]

6. So it is a good thing for

a small number to lose their jobs, and other to have no real change in their fortunes? My way would improve their fortunes (not much I admit) without costing jobs. The higher we increase the minimum, the better off the employees are, but the more of a burden on business (especially small business) it is, so that should be offset by the government with tax cuts/handout (with the necessary tax increases to the public). Things are not free; increase the cost of doing business and something has to give.

[Strong Atheist]

3. Show your numbers!

I did.

[dsc]

7. Your competor would be hiring people too

and would have to pay the minimum wage. Hence his costs would go up. I think that would be axiomatic. Incidenlty, several studies were done when NJ raised its minimum wage while its neighbors didn't. Job growth was not affected by that one bit according to the studies.

[Strong Atheist]

25. I find it difficult to believe

that some significant portion of employers would not choose to fire people to offset increased costs, and I really find it difficult to believe that EVIL CAPITALISTS with money would not relocate to where labor is cheaper ...

[dsc]

34. You are assuming that employers are paying the highest

wages they can if you think that any increase would dilute profits. Also, there are advantages to location and education that the US provides. I am not stating that there would be no point at which the minimum wage would cost jobs only that we aren't near that point yet.

[sandnsea]

35. Make up numbers?

You made up numbers based on an Econ 101 philosophy. We are so far gone from that, you didn't include stocks or dividends in your calculations and if you don't do that you've missed the entire canvas the business picture is painted on. I gotta go, I trust DSC can take it from here.

[SharonAnn]

4. I reject your premise. Prices may change or your profits go down.

Many other factors come into this.

Using your logic, if slave labor was "free", then the government should allow you to use it.

Oh, and of course, you'd give any excess profits back to the government. That's the reverse of what you propose with the "government" paying any increase you have to provide in wages.

And, by the way, the "government" is all of us. so you're taxing the entire country. I think it's better if you just adjust prices for those people who want to buy your products. If minimum wages go up, then all your competitors will have the same cost considerations you have.

Just because I want to buy stuff incredibly cheap, doesn't mean I'm entitled to demand a wage structure that pays people poverty or slave wages.

[Strong Atheist]

12. I realize that I am taxing the

entire country. If you want an increase in the minimum wage, someone has to pay. It ain't free. What if my competitors do not raise their prices, but fire people. Now I have higher prices then they do, and I lose money, so I am going to have to fire people and lower my prices t match my competitors.

[SharonAnn]

16. There are reputable sources with information on this. One is this:

http://www.epinet.org/content.cfm/issueguides_minwage_minwagefacts

There is no evidence of job loss from the last minimum wage increase.

A 1998 EPI study failed to find any systematic, significant job loss associated with the 1996-97 minimum wage increase. In fact, following the most recent increase in the minimum wage in 1996-97, the low-wage labor market performed better than it had in decades (e.g., lower unemployment rates, increased average hourly wages, increased family income, decreased poverty rates).

Studies of the 1990-91 federal minimum wage increase, as well as studies by David Card and Alan Krueger of several state minimum wage increases, also found no measurable negative impact on employment.

New economic models that look specifically at low-wage labor markets help explain why there is little evidence of job loss associated with minimum wage increases. These models recognize that employers may be able to absorb some of the costs of a wage increase through higher productivity, lower recruiting and training costs, decreased absenteeism, and increased worker morale.

A recent Fiscal Policy Institute (FPI) study of state minimum wages found no evidence of negative employment effects on small businesses.

[Strong Atheist]

27. Ok. I am not an economist,

Obviously. It seems to me that small business would be squeezed, and large business would relocate. However, if that is not the case on a wide scale I will admit that I may be wrong. Fair enough?


BTW, why DO large business relocate, if not for cheaper labor? It seems increasing minimum wage 9federal mandate) without increasing income (federal dollars) would exacerbate this trend of recent years.

[sandyd921]

5. Benefit of raising minimum wage

I am not an economist but this is my take on it. One of the primary benefits to that business and to the entire economy of raising the minimum wage is that when you give a raise to low-income workers they spend the money and it expands the economy. Unlike giving tax cuts to wealthy people who don't need the money to purchase goods and can just as easily put the money into savings, when you put money into the hands of low-income people (increasing the minimum wage is one way to do this), the economy fires up and as a result the widget manufacturer actually needs to hire more people to keep up with the increased demand for his products.

[Strong Atheist]

9. I have no problem with the benefits;

the problem is what do I do about my increased costs? This is not a free lunch; you can not increase the costs of doing business without having an effect on the business.

[SharonAnn]

19. You reduce your profit or you raise your prices.

All your competitors and providors of substitute goods will have the same decisions to make. You and we will al be in the same boat.

Go do your homework instead of making up "hypothetical" stories based on incomplete reasoning.

[Telly Savalas]

24. But this effect on the business doesn't necessarily translate

into lost jobs.

Princeton Professors David Card and Alan Kreuger recently published a book which does analysis of this issue based on empirical evidence:

the authors put standard economic theory to the test, using data from a series of recent episodes, including the 1992 increase in New Jersey's minimum wage, the 1988 rise in California's minimum wage, and the 1990-91 increases in the federal minimum wage. In each case they present a battery of evidence showing that increases in the minimum wage lead to increases in pay, but no loss in jobs.

http://pup.princeton.edu/titles/5632.html

I haven't read it yet, so I can't comment on their analysis, but back when it was first published, the econ egghead corner of the blogosphere was impressed by their work.

[MercutioATC]

13. That's the crux of the issue...

People making minimum wage put their dollars back into the economy immediately and locally. If you make them wealthy people, that could change, but they'll still be the working poor whether they make $5/hr or $7/hr. The big difference is those extra $2/hr that will be put back into the economy (instead of being used to...say...build a factory in China).

[jobycom]

32. That's pretty close to right.

Actually, it's right as far as it goes. The OP has the general gist of how raising the minimum wage would harm smaller businesses in the short term, but his picture isn't complete. First, very few people make minimum wage. It's a bare minimum entry-level wage paid usually to people who couldn't get better work. So, raising it to closer to market value wouldn't actually affect that many people or companies. Mostly, it's just a line below which we won't allow wages to fall, in case the economy sags.

Second, the other side of the equation is the market. That's where your post is perfect. Raising wages gives more money at the bottom of the economy. The economy is bottom-driven, despite the sophomoric beliefs of the right. Paying more money to the bottom of the ladder would stimulate the economy, giving some people (those who didn't lose their jobs) more money to spend, thus stimulating the economy and creating more jobs. Those who lost their jobs would then have more opportunities. Until they were employed, though, they would live off government assistance, more than likely, and thus the OP's suggestion of using taxes to fund the wage hike would already be used, in a less direct method.

Third, prices, contrary to what you will hear Republicans blather, are not based on the cost of merchandise. They are based on supply and demand. Cost affects profitability. Profitability may help a company decided whether to market an item, but it does not affect marketability (whether people want to buy the item). Cost affects price indirectly--if there are fewer people making a product, the supply is lower, and price can go up; also, since most merchandise is built from raw materials of some sort, the profitability of raw material may go down, those reducing the supply, thus raising the price. So in short, if you raise wages you raise the manufacturer's cost of an item, and the retail price of the item may go up some. But it won't go up equally to the increase in wages, so the net sum is the people who don't lose their jobs have more money, and the people who pay them (the manufacturers or business owners) lose some of their profitability, and therefore most struggle to make more money, or else reduce their living standards. This is good--it's where competition comes in and drives the economy, although somehow Repubs fail to understand that the competition they claim they want actually requires business owners to lose money.

So overall, a wage hike stimulates the economy but does cost jobs in the short term, if the hike actually affects wages. The MW is so low right now that raising it drastically won't affect that many people. Where I work, the only person making minimum wage is the grandson of one of the owners who is working part time just for the experience. Most people make almost double the MW. So it could be raised a lot without affecting much of anything.

The negative side to a wage hike would be inflation. Prices would go up, somewhat negating the raise. But that's the constant balancing act of the economy, between wages, profits and prices.

The greatest danger of a wage hike is making it too large too fast, so that it puts too many people out of work and drives prices up too fast for the economy to handle. That would send us into a recession, and if it is bad enough, we would not gain the benefits of the hike because the hit to the economy would be too great. (That's why I'm not for a "living wage" law--we should have minimum standards, but trying to pass a law that requires the minimum income to be above a certain average will never work, because the average will simply go up. Yeah, that's oversimplified, but I've gone on long enough.)

Anyway, we should raise the minimum wage, and drastically. It won't hurt most companies, and it will act as a safety net when wages start trying to fall, as they may any time now.

Just my long-winded opinion.

[dsc]

8. Incidently I forgot this in my post

but wages are tax deductable for employers. So, I fail to see why tax breaks would be needed given that they pay no taxes on that money to begin with.

[Strong Atheist]

14. I did not know that. Thank you!

However, I still need to come up with the extra money, without eating into my profit, changing my overhead, or raising my prices.

[catnhatnh]

10. Since when is a 20% pay raise ($6 per hr VS $5 per hr)...

a "pittance"??? "Not much of a change in THEIR income"???WTF do you not get about living with poverty wages....and your solution?? Give taxpayer money to the richest (business owners)???Go to Washington,Go directly to Washington.Do not pass go,do not collect $200(your employees weekly gross)-you'll fit in fine there....

[Strong Atheist]

15. There ain't no such thing as a free lunch.

TANSTAFL (Larry Niven came up with this acronym). Increase the minimum to $12 an hour, for all I care; the critical point is how is it going to be paid for? Being all fuzzy is very well, but not practical or realistic. Raising the cost of doing business means someone has to pay some way; probably by being fired.

BTW, my solution does not

Give taxpayer money to the richest (business owners

it merely offsets the unfunded mandate.

Give me your solution, if it is better.

[catnhatnh]

23. If there is no such thing as a "Free Lunch",

...why do you propose one for the business owner????

[catnhatnh]

26. Also how about this as a solution....

....increase the minimum wage to a LIVING wage and then let the "free market" do it's (supposed) magic??

[patdem]

11. Your Fixed cost assumption is wrong to start with...

Second, no matter my business size, or what I am producing/making/giving as a service, I have fixed costs (overhead). My facilities, rent, utilities, cost of materials, loans to pay back, employee insurance, employee health benefits, employee retirement benefits; all these things add up to regular expenses that have to be paid, just like an individuals' monthly mortgage, gas, heating, electric bill, etc.

Fixed costs are ONLY those that do not change based on business..that is Rent/Mortgage, Utilities, Loan Payments, Your salary, if you take one, Telephone, (advertising if you have a contract).

Employee costs are based on business, you hire when business is good and you lay off when business is bad and you do NOT purchase materials as a fixed cost, but as a result of business activity.

You are also wrong when you say you can only afford to pay $XX.XX per hour for employees..NO..you keep your books in order to determine how much PROFIT you make OFF your employees. Basically, after ALL your bills are paid you are making $30.00 in profit off of EACH employee, if the minimum wage goes up by $1.00 you make only $28.00 off of each employee (the cost is usually 1.5% - 2.0% of the hourly wage). That is a business model.

[Strong Atheist]

21. Fine. I will grant all of

your quibbling about economic terms. Regardless of what wording you chose to use, you have not addressed the FUNDAMENTAL, underlying issue, which is that my costs have gone up without an increase in revenue. How to pay for that? If I can't raise my prices because of competitors, I am going to fire people.

My solution increases revenue as well as increasing the price of doing business; what is your solution?

The current (COMPLETELY WRONG) assumption is that minimum wage can be increased with NO EFFECT on businesses, especially small business (which make up much of the economy).

[patdem]

31. Well, if you fire a person because of a $2.00 increase and lose $28.00

you are NOT going to be in business very long.

[daveinchi]

17. Uhhhhhhhhh . . .

Since it was instituted back in 1938 with a minimum hourly wage of $00.25 an hour, the minimum has repeatedly failed to bring about the end of business as we know it.

People with more money spend more money, fueling the economy.

[iamjoy]

18. Here's The Flaw

Why do you assume you'd still only have the same $30/$300/$3,000 per hour to spend on wages?
Some one is making $5/hr. With that money, they can't afford to buy a widget. But, they get a raise to $6/hr. Now, they can afford to buy a widget. And, say that happens to 10/100/1,000 people. Now, you no longer have only $30/$300/$3,000 to spend on wages, but $36/$360/$3,600. So, you can keep the same number of people.

Another thing that drives me crazy when people talk about raising the minimum wage leading to more unemployment - by that logic (using your example), if the minimum wage were cut to $2.50 per hour, would you hire 6 more people? Would you cut the price of your widgets by a proportional amount, or, being the greedy capitalist, would you just pocket the difference?

The only argument against raising the minimum wage that has some validity is that it can cause inflation. In your example, if you really need the 6/60/600 workers, you will have to raise the price of your widgets to compensate for the higher labor costs. Therefore, the purchasing power of the minimum wage worker doesn't increase even though they are making more money.

My idea is to abolish a number for the minimum wage completely but instead specify that it cannot be less than a certain fraction of the *total* compensation for the highest paid employee. You want to pay your workers $1 per hour - fine if you can get them, but you don't get more in TOTAL compensation (including stock options, bonus, etc) of $50 per hour. Viola - freedom and fairness.

[SharonAnn]

22. Right, there are plenty of reputable sources. One is this:

http://www.epinet.org/content.cfm/issueguides_minwage_minwagefacts

There is no evidence of job loss from the last minimum wage increase.

A 1998 EPI study failed to find any systematic, significant job loss associated with the 1996-97 minimum wage increase. In fact, following the most recent increase in the minimum wage in 1996-97, the low-wage labor market performed better than it had in decades (e.g., lower unemployment rates, increased average hourly wages, increased family income, decreased poverty rates).

Studies of the 1990-91 federal minimum wage increase, as well as studies by David Card and Alan Krueger of several state minimum wage increases, also found no measurable negative impact on employment.

New economic models that look specifically at low-wage labor markets help explain why there is little evidence of job loss associated with minimum wage increases. These models recognize that employers may be able to absorb some of the costs of a wage increase through higher productivity, lower recruiting and training costs, decreased absenteeism, and increased worker morale.

A recent Fiscal Policy Institute (FPI) study of state minimum wages found no evidence of negative employment effects on small businesses.

[BillZBubb]

20. As others have pointed out, wage rates hit all employers.

"...keep in mind that the business loss due to increased minimum wage is REAL". No, it is not. That is a false claim easily refuted by the history of past minimum wage hikes.

For the domestic market you are at no competitive disadvantage if the minimum wage is raised. All of your competitors fact the exact same problem. There is no real loss to the business, unless you fail to increase productivity or fail to pass on the cost in your prices.

At worst, there would be a small, short term loss as businesses adjusted to the wage rates. Some would hold prices and lose some income, which they might more than make up in increased volume. Others would immediately pass the added cost onto the consumers. In that case, they might lose some volume. In short order, however, the situation would stablilize and normal business margins would return.

In fact, the increased buying power injected into the system would expand the market. That would lead to higher volume production, which means lower costs of production (learning curve theory). In the end, businesses would be better off if all employees made enough money to increase their discretionary buying power.

The only problem would involve businesses heavily effected by foreign trade. Their competitors would not see the wage rate increase, so they would lose business or income. That gets into a whole new arena about the stupidy of America's corporatist push for globalization. Globalization is leading to a race to the bottom in wage rates.

[MrPrax]

28. Dyed in the Wool...

Your version of business is straight out of Bus Admin...essentially you have discounted so many things in your first part, that you have produced the answer you seek--no minimum wage increase.

Wages are determined by productivity -

It has always to me seemed to me an oversight in business calculus to suggest that all expenses, except for labor is a fixed or overhead cost? Vendor costs, wholesale pricing points, interest rates, energy, lease, etc rise and fall all the time, but rarely do we hear the business types complain about those markets. They ONLY complain when it comes to fixing a 'floor' for the price of labor.

In essense, you are saying that labor should continued to be ONLY priced by those that buy it--those who sell it, of course, should somehow take a loss for the benefit of those that buy it.

How about we change the dynamic slightly?

There are categories of business that demand a steady pool of low cost labor and go through 'workers' like some go through smarties after a spliff. These companies demand this flexibility of arranging their workforces and as such most of these categories are subsidized indirectly and directly by all the other businesses? You point out a whole list of employer obligations as IF all employers payed them. Certain type benefits (employee insurance, employee health benefits, employee retirement benefits) ONLY kick in, if employment requirements are met.

If a business isn't paying a liveable wage, then invariably, the task of providing for that GAP falls on other businesses and workers? Why should I support a business that insists that the public pay towards it's bottom line. How is this capitalism.

Certainly minimum wage isn't the whole answer, but it's a start to pushing social costs back onto those that actively purchase labor.

Pay checks are also being shortened by 'reduced' hours and part time status. In fact, part time hours and multiple jobs seems to be much more salient as minimum wage. Few workers work at the federal minimum wage? Many many more work in part time circumstances and that is as much a factor in lower take-home pay.

This to me seems a much simplier solution in the short term to regulate hours of work by eliminating the part time and full time categories entirely and move to mandatory worker benefits to eliminate the public subsidizes, like medicare.

The other thing to do is to start pushing training costs back on to businesses who have successfully evaded them (apprenticeship gone, education is now wholly self-funded, higher and skilled immigration is demanded). If business was required to invest more in training, they would be less likely to jetison employees here, in favor, of out-sourcing.

Hell I am all in favor of handing corps a bill on their way out of the country, actually.

[iamjoy]

41. The "Off Shoring" Is An Interesting Aspect Of It

If businesses were forced to invest more in training, they would move overseas before such regulations were implemented.

I think it is harder to refute that rising wages/employment costs here ARE driving some businesses overseas as they attempt to maximize their profits. A little increase here and there, not a big affect. But, at a certain point, the larger business is going to move operations overseas where they can pay 50 cents per widget. Sure, some American workers will lose their jobs, some will adapt to other jobs and they will be able to buy even MORE widgets because the widgets are now cheaper. Other Americans will not adapt, will not find new jobs and in the long term, this will drag down our economy. However, to propose reducing wages and benefits as a solution or response to globalization is short sighted.

Yes, we need more regulation in this, but how to regulate a factory overseas? I have heard some Democrats talk about "fair trade" but how exactly/specifically would that work? I understand the concept of environmental and labor regulations apply overseas, but how do we require or enforce that?

One method of government regulation could be to prevent companies from having a large office building in New York City, a PO Box in downtown Hamilton and pay no US Corporate tax because officially they are a Bermuda corporation. It may be easier to cotnrol that. The government can then take those tax revenues and invest into our people, our economy.

What once made the American economy (one of) the strongest and most powerful in the world was not lack of regulation on how American business ran, etc. What made the American economy great was, at least partially, the strength of American workers and investment by companies and, yes, the government. Regulations and laws helped too. But the the old model that worked so well sixty odd years ago no longer works the same way today.

[Yavin4]

29. You Are Making Some Key Mistakes In Your Analysis

First, there are other costs in addition to your labor costs, like taxes. The amount that your labor costs go up is offset by the reduction on your taxes. So, instead of paying the government more, you'll be paying your employees instead.

Second, you could easily maringally raise the prices on your goods to pay for the increased labor costs which your competitors will also have to pay.

Third, increases in the minimum wage automatically increases your customer base, as more consumers will have more money to buy your goods.

The minimum wage in this country has not kept pace with inflation. Thus, it's lower in real terms than it was in the 1970s.

[Strong Atheist]

30. Ok. I give! peace!

:spank: to me. I am NOT an economist. I still tend to think that much of the movement that we have seen in recent years for LARGE business to move overseas revolves around cheaper labor. However, since everyone here is saying that costs can be increased with no offset needed in employment, I will retreat on that. Some of the argument I even understand, so I will admit to being wrong about that. I would like to hear about the large business/overseas issue, though.


EDITED TO ADD: I started this when I had to be somewhere soon. I will check again tonight/tomorrow to see about responses on the cheaper overseas labor issue.

[prolesunited]

33. You should try starting a thread

on a topic you know something about. Or ask a question or do some research.

[Strong Atheist]

36. Thank you for your kind reply, after I gave in!

I actually remain unconvinced that SOME people do not get fired due to this. I note that you did not answer my question about larger business moving where it is cheaper. Thanks again!

[iamjoy]

39. Oh, Lighten Up

I think this was a great opportunity to learn. Strong Atheist had an idea about minimum wage/business - been listening to a little too much big business spin, maybe. You suggested doing research or asking a question. Why not used Democratic Underground as a method of research? Oh, sure, we're a little biased ;-) but most of us are pretty smart. I realize that the point of the posting wasn't a question, but I think that we need to feel comfortable here voicing different ideas and learning from each other.

I personally think this is a fascinating topic and an interesting change from some of our normal political postings.

[Tsiyu]

37. I realize that you have posted elsewhere that you've been "schooled."

I just wanted to add a few thoughts.

If you hire a $20 chef to cook a $2 steak, she'll make that steak taste like a $50 steak.

If you hire a $2 chef to cook a $20 steak, you'll be lucky if it tastes like it's worth $1.

I realize that this may shock some of the corporate types but: Employees are not like other resources you procure.

You don't have to train fabric or ball bearings to be fabric or ball bearings. You don't have to worry about health care for fabric or ball bearings. If you run out, you buy more.

Fabric and ball bearings never have family issues - no kids to raise, no elderly parents. They never get hungry.

You can bottom-line resources like ball bearings and fabric.

If you bottom-line in the same manner with human resources, you are going to have tremendous turnover issues, because people will not remain in low-paying jobs longer than they must.

The cost to continue to hire and train people, the cost in lost productivity because your employees are sick ( they can't afford proper health care with the wages you pay) or have bad attitudes and refuse to work at full capacity will hurt you more tha paying a living wage to begin with.

Loyal, hardworking human beings should be cherished by businesses, not degraded.

So, why doesn't Joe Business Owner realize that employees work for the same thing he does? $$$$$$$$$$$$$


Why is it evil to stifle the CEO making a million a year, yet it's morally and economically acceptable to virtually enslave the worker?

That model makes absolutely NO SENSE.

[Nikia]

38. I know of no manufactureres who pay minimum wage

In my current area and the area where I grew up, even when unemployment was over 10%. If you raise the minimum wage enough, that could become an issue. For now, though, it is rare because manufacturers don't want to employ the people who couldn't get a job somewhere else and they don't want the turn over of McDonald's.
In my home area, especially with the high employment rate, people working minimum wage jobs tended to work in the service industry. You aren't going to move a restaurant or grocery store or cleaning service to China. As others pointed out, if your employees have money, they might be able to spend more.
On a related note, why is it that National chains seem to be able to be able to keep up with the local labor market without big differences in prices? For some reason, McDonald's that pay minimum wage and those that pay $9/hour have the same prices.

[Yupster]

40. The Earned Income Tax Credit

was set up with your problem in mind.

The idea was to not put the burden of extra cost onto the employers to lift the workers up. It was taken up by the government instead in the form of a refundable tax credit.

[snippy]

42. The thing that is wrong with your example

is that businesses do not make employment decisions based on what amount of money is left over after any calculation of overhead. Businesses make hiring decisions based on the effects on revenue, cash flow, and profit.

That being said, increases in the minimum wage do have a small negative effect on employment at the margin, assuming that all other factors remain unchanged, which is a huge assumption. However, everything that every government does has a negative effect on someone. Increasing the mininmum wage is good policy and good politics and is even good for most businesses since the increased wages get spent or saved.