Democrat Economic Leadership

[dgs49]

Although I can understand having sympathy for those mainly-mythical people who are trying to support themselves with minimum wage jobs, the level of profound ignorance that comes to the surface in discussions of minimum wage increase effects is astounding.

Forget about wages. Just consider sales transactions in general. Every THING that is bought and sold has a value. The value can be determined by any one or more of a number of factors, but it is what it is.

Now, a supervening Authority comes in and says that there is a minimum price for the THING, and then it raises that minimum price periodically over time. If the economic value of the THING is greater than the minimum price, then the effect of the minimum is negligible.

But if the VALUE of the thing is less than the mandated price, the purchasing public will ALWAYS do one or more of the following:

- Buy less of it,
- Seek cheaper alternatives, or
- Seek out a "black market" where the Authority doesn't have control.

It doesn't matter whether the THING is a commodity, a service, or labor. These effects will always occur when the mandated price is greater than the value of what is sold.

In the case of MW, there are always a plethora of outside factors and influences that obscure what is actually happening. In some geographical areas. the minimum wage is less than the value of un-skilled, inexperienced labor, so the MW has no effect - it is irrelevant. This is usually due to one form or another of labor shortage. Australia is on the bottom half of the earth, but the same economic principles apply there as on the rest of the planet. The fact is that due to a RELATIVE scarcity of labor, the minimum wage can be raised to a point higher than it is in other places without throwing (many) people into permanent unemployment. Good for you. Would you suppose that it could be doubled in Australia? Go for it!

In countries with a robust safety net, like Western Europe, you have a combination of high minimum wages, generous and unlimited unemployment compensation, and strong protections for employees, and the PREDICTABLE AND ACTUAL RESULT is double-digit unemployment, IN PERPETUITY. While the politicians would be reluctant to admit it, this is a choice they have knowlingly made: It is acceptable to have up to 15% of the public permanently on the dole, and getting enough of a stipend to keep them in the lower reaches of "middle class." This is why they pay US$8.00/gallon for gas/petrol, and pay half their incomes in one form of tax or another. If it works for them (which it patently does not) then, fine, have at it.

But in the U.S., we consider that unemployment should be a temporary situation, and we will not tolerate people being permanently and generously on the dole.

And how can you look at, for example, the unemployment rate for minority teens in this country and NOT see that the federal and more-generous state minimum wage laws are hurting these most-vulnerable people in our society?

Even our catatonically stupid Democrat politicians recognize the negative impacts of increases in the minimum wage. Otherwise, why not make it $15.00/hr?

No, they waited until the economic minimum wage was substantially above $7/hr before they increased the MW to that level, because the KNEW how harmful it could be. Now, with the recession, their haste has resulted in significant harm to those seeking to enter the job market - BUT LIBERALS STILL DON'T SEE IT. They somehow believe that by forcing one person to pay more than something is worth and giving the excess to another person, that somehow promotes prosperity for all. Unfortunately, you can't force anyone to hire someone (other than in Government).

Amazing.

And back to the ancillary question: HOW DOES IT HARM YOU IF SOME EMPLOYER HIRES A TEENAGE FOR $4.00/HR?

[Scooter]

It depresses overall wages.
It depresses consumption and is therefore a drag on the economy.
It increases the cost of social welfare programs.
It creates a disincentive to finding legitimate work and encourages seeking income from illegal means, increasing criminal activity.

[Scooter]

In countries with a robust safety net, like Western Europe, you have a combination of high minimum wages, generous and unlimited unemployment compensation, and strong protections for employees, and the PREDICTABLE AND ACTUAL RESULT is double-digit unemployment, IN PERPETUITY.

Which is why the unemployment rate in countries like Germany, Italy, the Netherlands, Sweden, the UK, Austria, Belgium, Denmark and Finland is LOWER than in the U.S., and hasn't been anywhere near double digits since sometime in the early 1980s.

[BoSoxGal]

mainly-mythical people who are trying to support themselves with minimum wage jobs

You are so incredibly out of touch with reality, dgs.

[Scooter]

But in the U.S., we consider that unemployment should be a temporary situation, and we will not tolerate people being permanently and generously on the dole.

Of course not, you send them out into the streets to deal drugs instead, since Americans are the only people in the world who can afford to buy them.

[Long Run]

The minimum wage is a tangent in this discussion since it is not going anywhere. Even though it makes no economic sense, its advocates have won the political battle. A politician has more chance to make Social Security and Medicare less costly than trying to roll back the minimum wage. The best economic-sense politicians can do is try to limit future increases in the rate. In the overall economy, the minimum wage problem mainly impacts teenagers, and such has little to nothing to do with the lousy macro economy. However, a politician's understanding of the minimum wage is indicative (i.e., does he or she know the first thing about economics) of whether to support policies that are aimed at getting the economy going.

bigskygal wrote

dgs49 wrote:mainly-mythical people who are trying to support themselves with minimum wage jobs

You are so incredibly out of touch with reality, dgs.

According to new numbers from the Labor Department, in 2008 only 1.1% of Americans who work 40 hours a week or more even earned the minimum wage. In other words, 98.9% of 40-hour-a-week workers earn more than the minimum. The data also show that teenagers are five times more likely to earn the minimum wage than adults. Minimum wage jobs are nearly all first-time or part-time jobs, and an estimated two of every three minimum wage workers get a pay raise within a year on the job.

From the above quoted WSJ article.

[Crackpot]

That can be a little misleading since one cent above minimum is above the minimum. not to mention the minimum wage is only required for full time jobs.

[Scooter]

According to new numbers from the Labor Department, in 2008 only 1.1% of Americans who work 40 hours a week or more even earned the minimum wage. In other words, 98.9% of 40-hour-a-week workers earn more than the minimum. The data also show that teenagers are five times more likely to earn the minimum wage than adults. Minimum wage jobs are nearly all first-time or part-time jobs, and an estimated two of every three minimum wage workers get a pay raise within a year on the job.

From the above quoted WSJ article.

And workers who are working, say, 33 hours per week because it enables their employers to count them as part-time employees and avoid paying them any benefits? How many of them are working for minimum wage?

How many people are working two or three minimum wage jobs which are each part-time but add up to full-time hours or more?

I guess those who have never had to worry about whether they will go to bed with a full belly wouldn't have thought about what people in those circumstances have to deal with.

[Long Run]

Fair point, Crackpot. It may be hair splitting to say that not many people try to support themselves (or family) on a minimum wage job, when everyone would agree too many try to do so on a minimal pay job (e.g., $8-$15/hr). But if one of the justifications of the minimum wage is to require employers to pay at least a wage that allows someone to support themselves at some poverty level, that justification is without merit. Other more effective programs such as the earned income credit help people in low paying jobs support themselves, as do supplemental welfare programs such as food stamps and housing assistance, along with all of the general public services such schools, transit, roads, libraries, etc.

[Scooter]

So all of us should subsidize business profits to hire cheap labour even more than we already do?

[Crackpot]

Minimum wage is tricky in that the cost of living varies greatly between states let alone within most states

[Gob]

The number of Americans living in poverty rose to a record 46.2 million last year, official data has shown.

This is the highest figure since the US Census Bureau started collecting the data in 1959.

In percentage terms, the poverty rate rose to 15.1%, up from 14.3% in 2009.

The US definition of poverty is an annual income of $22,314 (£14,129) or less for a family of four and $11,139 for a single person.

The number of Americans living below the poverty line has now risen for four years in a row, while the poverty rate is the biggest since 1993.

Poverty among black and Hispanic people was much higher than for the overall US population last year, the figures also showed.

The Census Bureau data said 25.8% of black people were living in poverty and 25.3% of Hispanic people.

Its latest report also showed that the average annual US household income fell 2.3% in 2010 to $49,445.

Meanwhile, the number of Americans without health insurance remained about 50 million.

The data comes as the US unemployment rate remains above 9%.


http://www.bbc.co.uk/news/business-14903732

How did US debt get so bad?

[Long Run]

Gob: Having watched a bit of the US-Ireland rugby w/c match, I think one difference with American football is that ruggers seem to not have a rule about refraining from piling on when the runner is down!

[rubato]

BushCo and the Repuglican economic collapse have driven the poverty rate to the highest level since, uh his father was president.



Thanks repuglicans! You really hate America!

yrs,
rubato

[Gob]

Gob: Having watched a bit of the US-Ireland rugby w/c match, I think one difference with American football is that ruggers seem to not have a rule about refraining from piling on when the runner is down!

Is this in the right thread mate?

[Sean]

Close enough...

[quaddriver]

Fair point, Crackpot. It may be hair splitting to say that not many people try to support themselves (or family) on a minimum wage job, when everyone would agree too many try to do so on a minimal pay job (e.g., $8-$15/hr). But if one of the justifications of the minimum wage is to require employers to pay at least a wage that allows someone to support themselves at some poverty level, that justification is without merit. Other more effective programs such as the earned income credit help people in low paying jobs support themselves, as do supplemental welfare programs such as food stamps and housing assistance, along with all of the general public services such schools, transit, roads, libraries, etc.

nice to see someone reads and not only that, the same books. tip o the hat

[rubato]

"... But if one of the justifications of the minimum wage is to require employers to pay at least a wage that allows someone to support themselves at some poverty level, that justification is without merit. ... "

Show that it is without merit.

"...
Other more effective programs such as the earned income credit help people in low paying jobs support themselves, as do supplemental welfare programs such as food stamps and housing assistance, along with all of the general public services such schools, transit, roads, libraries, etc.

All of those other programs amount to subsidies for marginal occupations and employers who do not want to pay a living wage; they are a way of low-pay employers to suck off the taxpayers teat and to keep dead industries on life support.

This is actually a powerful argument in favor of a higher minimum wage. Especially now that all have admitted that raising the minimum wage has had no effect on unemployment.

yrs,
rubato

[rubato]

"...

Now, a supervening Authority comes in and says that there is a minimum price for the THING, ... "

Most morality is predicated on the idea that human beings are not "things".


yrs,
rubato

[dgs49]

So it's agreed then: The Libs who post here believe that the solution to poverty in the U.S. is to increase the minimum wage to a level where everyone who works a FT job will earn more than the annual income that defines, "poverty."

Pretty much proves the point I was making when I started this thread.

Democrats are idiots when it comes to simple economics.