Raise the minimum wage?

[Ayayay]

Another problem is that a lot of people who advocate removing the minimum wage have a high school level understanding of economics. 
 
People who took economics in high school likely remember this image.

 

And here's the thing, it's wrong
It tries to use a basic supply-demand model but the problems are two fold.

1. It assumes that having everyone employed is desirable, which it isn't. 3-4% unemployment is what's called "full employment" and that's a good number for a healthy economy. Even then, we only reached that a handful of times and the USA's unemployment rate tends to hover around 5-6% which is healthy.

2. There is is almost nothing to back it up. Seriously, almost no data supports the model. The reason you learned it in high school economics is because it is used to build upon later, specifically college level economics classes.

Edited September 29, 2014 by underlordgc

[SoS]

I never saw a chart like that...I didn't have the opportunity to take economics in HS. At that age, I studied economics independently for my own pleasure. So, I had an open mind when I studied it in college (read: I thought they were full of shit (especially the commie professors)).

 

I actually worked out this theory with a professional economist. He finally agreed it would work, "but why would anyone want to do it". The answer to that is it's a revolution that would result in post scarcity instead of further scarcity through class warfare.

 

You must keep in mind how unemployment rates are tracked. Most of the recent unemployment drastically declined after 99 weeks, when the majority ceased to be recorded by their statistics. There's a great deal more unemployment than the statistics reveal. Still, I know "full employment" isn't ideal. That leads to the worst kind of inflation. I just want enough employment to counteract the corporate enforced illusion of scarcity. Yes, I know the difficulties in producing abundance. Common capitalist practices exacerbate that. Least we can do is attempt a real solution. That's not going to be found in the current system of raising wages and costs and prices and everything, but production. I know the rates at which production is commonly increased. It's about the same rate as inflation.

 

I'm not at all seeking employment equilibrium; I'm seeking supply equilibrium. Lower wages and prices and deflation would be necessary for that. Well, it would rather be a result of supply equilibrium. Imagine post scarcity...it would most definitely include deflation.

 

I doubt I'm poorly trained; I think you guys are well trained.

[Toxxikation]

The whole thing here is that a wage increase of 206% (7.25/hr to 15/hr) for a 1% increase in the cost of goods (suggested number if Walmart made this change listed in an article I previously posted) is a wonderful trade-off in this situation. I spend about $300 per month on groceries, which comes out to $3600 per year. A 1% increase in the cost of goods would cost me a whopping $3/month extra. Well worth it, in my opinion, to have the Walmart employees not be slaves to their jobs, thus making them happier, and more helpful. Not to mention they can now afford to come buy things in my shop even though we had to increase prices about 2% (a rise of $6/month assuming they spend $300/month in my store.)

 

I was reading an article about the cost of movie tickets in hours at minimum wage to afford a movie ticket. Since the 70's it's increased from about 14 minutes at minimum wage to afford it to now costing over an hour of your time to afford to see the same thing. Once I find it, I will link it here for you.

 

A wage increase for the low class and lower middle class will lead to larger revenues for the upper middle to high class, while causing a small increase in the cost of goods sold.

[SoS]

If everything proposed went according to that article - that'd be great. But, it's highly doubtful.

 

The link to DoL above shows that increases in minimum wage have never led to larger revenues for the wider economy. The whole argument hinges on that point and fails on that point. I expect that is due to most of the money going right back into mcdonalds and walmart. Think about where the working poor shops.

 

Without the wishful boost in the overall economy, median earners will be shouldering all the costs. As well as all the franchise owners who maintain only a 2% profit margin as opposed to the chain restaurants that enjoy a 14% profit margin. Strictly by the numbers; prices will rise, median earners will suffer, and small businesses will be crushed.

 

It costs over an hour of minimum wage to buy a burger combo. If that price goes from $8 to $15 can you imagine the number of consumers not willing to pay that? More realistically, the price would increase to about $11. The labor costs in the industry are 20% and the industry anticipates a 20% price increase (labor cost doubled). Double the wages and what else can we really expect? Suddenly it will require less labor to serve a burger? Suddenly they'll get smarter and stop !@#$ing up the orders? Sorry, I've been around long enough to know better.

 

As for walmart, plan an extra hour for checkout.

[Grillick]

I can't really speculate what ripples in the market raising minimum wage might cause.

The link to DoL above shows that increases in minimum wage have never led to larger revenues for the wider economy. The whole argument hinges on that point and fails on that point. I expect that is due to most of the money going right back into mcdonalds and walmart. Think about where the working poor shops.

 

Without the wishful boost in the overall economy, median earners will be shouldering all the costs. As well as all the franchise owners who maintain only a 2% profit margin as opposed to the chain restaurants that enjoy a 14% profit margin. Strictly by the numbers; prices will rise, median earners will suffer, and small businesses will be crushed.

 

It costs over an hour of minimum wage to buy a burger combo. If that price goes from $8 to $15 can you imagine the number of consumers not willing to pay that? More realistically, the price would increase to about $11. The labor costs in the industry are 20% and the industry anticipates a 20% price increase (labor cost doubled). Double the wages and what else can we really expect? Suddenly it will require less labor to serve a burger? Suddenly they'll get smarter and stop !@#$ing up the orders? Sorry, I've been around long enough to know better.

 

As for walmart, plan an extra hour for checkout.

So, SoS, which is it? Can you speculate or can't you?

[SoS]

Okay, strike the speculation. GDP in the past hasn't risen with minimum wage increases. That shows, that in the past, the economy wasn't boosted by the minimum wage increases.

[Toxxikation]

http://www.data360.org/dsg.aspx?Data_Set_Group_Id=762

 

The minimum wage needs to, at least, keep up with inflation. Based on 2005 numbers, the highest "value" the minimum wage has ever been is $7.93 ($2.65/hr in 1978 was worth $7.93 in 2005). Compare that to today, the minimum wage would need to be $9.66 in order to keep up with inflation. That's $2.41 higher than it is right now. That's $100 per week that a minimum wage worker is losing. That extra $100 a week is the difference between having to work two jobs or keeping one job and going to school. That's $3900/year per minimum wage worker going back into the economy, assuming each worker saves 25%.

 

The GDP didn't raise with increases in minimum wages because the increase has never been more than $.70/hr, or a whopping $28/week. That's only $1,000 per year per minimum wage worker, assuming 25% savings again.

 

The minimum wage needs to be brought up to current inflation levels as quickly as possible in order to make an impact on the GDP, otherwise, people are still going to struggle to pay for their basic necessities rather than spending it on things they don't need, which is what drives our economy.

[Ayayay]

The minimum wage needs to be brought up to current inflation levels as quickly as possible in order to make an impact on the GDP, otherwise, people are still going to struggle to pay for their basic necessities rather than spending it on things they don't need, which is what drives our economy.

An economic system that survives by rampant and uncontrolled spending cannot exist when the people can't afford to.

[Grillick]

An economic system that survives by rampant and uncontrolled spending cannot exist when the people can't afford to.

Taken as a whole, the people can afford rampant and uncontrolled spending. The problem is that the distribution of wealth is so unequal that the people who would be most likely to spend rampantly cannot afford to. An increased minimum wage would help to address that inequity.

[Ayayay]

Taken as a whole, the people can afford rampant and uncontrolled spending. The problem is that the distribution of wealth is so unequal that the people who would be most likely to spend rampantly cannot afford to. An increased minimum wage would help to address that inequity.

That's what it originally said but it sounded stupid so I dropped that part. Edited October 2, 2014 by underlordgc

[WISD0MTREE]

Taken as a whole, the people can afford rampant and uncontrolled spending. The problem is that the distribution of wealth is so unequal that the people who would be most likely to spend rampantly cannot afford to. An increased minimum wage would help to address that inequity.

Sheepy should add in a wealth redistribution system for the whole game, then!  Inequality!!!1!111!!uno1!!!1!11!!1

[Grillick]

Excessive wealth inequality is usually a symptom, rather than a cause, of an unjust economic system. But in the American case, it has grown to such proportions that it has become a self-perpetuating system.

[SoS]

I agree, but income disparity is just part of the free market value system. The system is efficient at trading things for what they worth (what people are willing to pay).

 

I'd prefer to make the supply of goods and services that are part of a high standard of living more abundant and cheaper.

[Grillick]

I'd prefer to discuss actions and solutions rather than abstract goals.

[SoS]

Instead of a minimum wage, set a minimum production. They must sell 25% more burger combos.

[WISD0MTREE]

I actually had a dream last night where I was at my old job and was being paid per ticket sold. I wonder if that would work outside of my dream. ^{_{I doubt it.}}  It would actually be interesting because people who take a shift at 3 AM, they will get paid less than someone who works at a busier (and more stressful) time. 

[Solomon]

I agree, but income disparity is just part of the free market value system. The system is efficient at trading things for what they worth (what people are willing to pay).

 

If you had the capital to wield power in the financial markets, you'd be a fool not to use your clout to push up the perceived value of the goods you're interested in selling. It's your financial obligation to your shareholders. The challenge in a democracy is to keep the non-shareholding members of the electorate believing that what you're doing is in their best interests.

[SoS]

Exactly. The reason they have sold us capitalism=democracy.

[Big Boss]

The main argument against minimum wage is the fact it'll increase prices. However, that's simply not the case, although you may see a increase in prices after the minimum wage increase, you'll also see a lot of small businesses and other small store chains, as well as other industries doing better, because the average citizen has more money in their pocket, they're going to be buying more. I know people who would rather spend 10$ in gas to go to Walmart, than pay an extra $.50 on a soda at the store literally across the street.

 

It wouldn't be so much a problem if their wages were increased. it makes people feel more secure, and some of the biggest periods of innovation and economic growth correlate to the minimum wage. As of now, the average worker's productivity has increased almost double, but their wage has stayed the same. that's a huge problem, and we're going to see a fracture in the economy soon enough, if it is not increased. 

[Aisha Greyjoy]

Again, we should do a modest increase.  If there's no negative consequences, that's proof it works.  If it leads to problems, at least its only a small problem.  $1 a year for 3 years seems reasonable.

[Big Boss]

Again, we should do a modest increase.  If there's no negative consequences, that's proof it works.  If it leads to problems, at least its only a small problem.  $1 a year for 3 years seems reasonable.

Even that much is too little, it should be at least $.75 every six months. otherwise people will be staying under the poverty line for six years, because of part time positions. 

[elsuper]

Even that much is too little, it should be at least $.75 every six months. otherwise people will be staying under the poverty line for six years, because of part time positions. 

 

I'm not sure if you're saying that raising the minimum wage would increase the availability of full-time work? Because that doesn't make a lot of sense to me.

[Big Boss]

I'm not sure if you're saying that raising the minimum wage would increase the availability of full-time work? Because that doesn't make a lot of sense to me.

It'd compensate for the lack of full time work. most workers these days are considered part time, because of corporate loopholes. 

[SoS]

The main argument against minimum wage is the fact it'll increase prices. However, that's simply not the case, although you may see a increase in prices after the minimum wage increase, you'll also see a lot of small businesses and other small store chains, as well as other industries doing better, because the average citizen has more money in their pocket, they're going to be buying more. I know people who would rather spend 10$ in gas to go to Walmart, than pay an extra $.50 on a soda at the store literally across the street.

 

It wouldn't be so much a problem if their wages were increased. it makes people feel more secure, and some of the biggest periods of innovation and economic growth correlate to the minimum wage. As of now, the average worker's productivity has increased almost double, but their wage has stayed the same. that's a huge problem, and we're going to see a fracture in the economy soon enough, if it is not increased.

1. How can you raise the cost of an item and not raise the price?

 

a. Lose money on every item, but make up for it on volume. Ha ha

 

b. Lose money and go out of business.

 

c. Fire half your staff and make the rest work twice as hard.

 

You have to cover your costs or you will eventually go out of business.

 

2. There a statistic, called the GDP, which would show an increase in the economy from a minimum wage increase...if a minimum wage increase would increase the economy, but it never has.

[Big Boss]

1. How can you raise the cost of an item and not raise the price?

 

a. Lose money on every item, but make up for it on volume. Ha ha

 

b. Lose money and go out of business.

 

c. Fire half your staff and make the rest work twice as hard.

 

You have to cover your costs or you will eventually go out of business.

 

2. There a statistic, called the GDP, which would show an increase in the economy from a minimum wage increase...if a minimum wage increase would increase the economy, but it never has.

Flaw in logic #1

 

GDP is a measure of economic activity, not economic strength or health. 

 

Flaw in logic #2 

 

If walmart paid all of their employees an living wage, it would be an increase of 1 cent on a box of mac and cheese.

 

Flaw in logic #3, 

If you own a business that can't withstand paying the minimum wage, then your business should go bankrupt, because you already can't support it.

 

You're looking at this as a guise of people spending less money, in reality they'd be spending more. If i had a pay increase of 3$ an hour i'd spring for a new car seat, or a new computer part, maybe get some better foodstuff, because i can AFFORD it. 

 

If you cut out minimum wage completely (Hello 1920's) you'd see huge corporate profits, and also living and working conditions fail to the point where starvation and degradation of society to the point of collapse. 

You already have the top payers in a economic system, sitting literally on billions of dollars, they will likely never spend, or be able to for that matter. 

 

Flaw in logic #4

 

You can't "Increase" the economy, and if you knew ANYTHING about macro economics, you'd know that. The supply of wealth and the demand of wealth is best situated at the point wherein they are equal-equilibrium. at the moment, you underpay workers, you hurt the economy. 

 

http://thinkprogress.org/economy/2013/12/19/3091141/minimum-wage-gdp-jobs/

 

Think about that, Rather than hurt the economy it'd add over 85,000 jobs. That's because people have buying power. America was always stronger when it had a strong middle class, that could afford appliances, as well as homes, and education. Not to mention the amount of government revenue that would increase almost exponentially from the induction of minimum wage, there really are no cons. 

 

Besides that, it would help get millions in taxpayers money back to the government, considering many people whom are on food stamps are actually working class americans. 

Edited October 22, 2014 by rrussell263