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Philosophy and results of the Minimum Wage

Discussion in 'U.S. Politics' started by Little-Acorn, Jul 24, 2009.

  1. Little-Acorn

    Little-Acorn Well-Known Member

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    The Minimum Wage is a concept created by people who think the purpose of companies is to create jobs rather than to earn money. It's hardly a surprise that most of them don't run companies.

    Saw a cartoon four or five min-wage-increases ago. It showed a fast-food manager talking to his crew, seven or eight people who are gathered around him. He says:

    "I have good news, and I have bad news.

    "The good news is, the new minimum-wage law says I have to pay you more.

    "The bad news is, I can't afford that, so two of you are fired."

    -----------------------

    Before minimum-wage laws became popular, you could pull into a gas station, and someone would come out and ask, "Regular or premium?" At the same time, someone else would check your car's oil and water levels, clean the windshield, put air in the tires, etc. Where are they now?

    They were killed off by minimum-wage laws.

    When they were doing those jobs, it was because the gas station owner had found out that, when they were working there and doing those things, more customers chose his station to buy gasoline. And enough extra customers came in, that he made enough additional profit to pay their (low) wages. So it was economically feasible for him to employ them, contributing to the purpose of the station (to earn money for the owner).

    Enter the Minimum Wage. Suddenly the owner had to pay those people $8.00/hr (2008 dollars) instead of the $4.00/hr they had been willing to work for. And just as suddenly, the extra customers they brought in, no longer brought in enough profit to pay the windshield-cleaners' wages. Some raised their prices, but then found their customers started going to the place down the street that hadn't raised prices - those places had just fired the windshield-cleaners instead. Some divided their pumps into full-service and no-service, the full-service pumps having higher gas prices to pay for the extra people who worked only there. But not enough customers used the full-service pump, and the windshield-cleaners mostly sat idle. So before long, they were history. Now, thanks to Minimum-wage laws, extra entry-level workers who used to be worth employing, no longer were, and their jobs vanished.

    Gone were their chances of getting bicycle money or bus fare. They now had to wait for a job (much rarer) to open up paying enough to support a car. Gone were their chances of getting an "easy" job that could give them their first experience and their first recommendation from a satisfied employer. Gone were their first chance to start developing a work ethic that would make them more likely to get a better job later.

    Yes, Minimum Wage laws help people - the ones they don't fire.

    Min Wage laws also help someone else: Unions. Most unions set their wage scales based on - you guessed it - the Minimum Wage. So when the Min Wage goes up, not only do the lowest-paid workers get more money, but the employer is forced to pay more money to his entire hourly-wage staff, including the most highly-paid ones. And since these employees who get more money today than yesterday, aren't bringing in any more profit today than they were yesterday, the fast-food scenario described above, applies.

    Inflation is another subject. That's what you have, when the price of everything rises (goods, services, wages alike). When a company is forced to pay some or all of its workers more, while they aren't bringing in any more money than they used to, they have no choice but to raise prices. And they hope their competitors have the same problem and so can't lure their customers away. And the people buying their products find themselves paying more for no more goods, and so must raise their prices to make up. And so, prices rise everywhere, as wages rise. Sound familiar? Inflation has many causes. Minimum-wage increases are among them.

    The "living wage" argument is especially ludicrous. Some people actually complain that the reason we need a higher Minimum Wage, is becausae you can't support a family of four on the (older) minimum wage.

    Well, who on earth ever said you could? Or should?

    This "argument" comes directly from those misguided souls who think companies exist to create jobs, not earn money for their owners. And who think that jobs exist to provide people a living, not to get work done for the company.

    If you have a family of four to support, why are you working as a clerk at a stereo store, or picking apricots in an orchard? With no plans to move up to a better-paying job, get training at night school, etc.? Is it your employer's job to support your family? Or is it yours?

    So much is wrong with the idea of a mandated Minimum Wage, that it takes more space than we usually have in a forum like this. But there are a few of the high points.
     
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  2. Andy

    Andy Well-Known Member

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    Dead on accurate. What's even more amusing is that those people who want to raise the minimum wage in order to obtain a "livable" wage, never figure out that by increasing the first, you increase the other, and thus the two will never actually meet.

    Like the article said, increasing the minimum wage, you automatically cause inflation since all those wage increases filter down into higher product prices, and thus in Canada for example, most provinces have a minimum wage of $9/hr or higher. Yet a sub at subway fast food is nearly $20. Granted there are additional factors that cause high prices, but this is one of them.

    Every time the minimum wage increases, the cost of living increases, which means a "livable wage" increases, which means minimum wage has to increase again, and the cycle goes on and on.... meanwhile the value of our currency declines and declines.
     
  3. TheFranklinParty

    TheFranklinParty New Member

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    I couldn't agree more with the two previous posts...raising the minimum wage increases the cost of living, period! Too many people have been brain washed that the "Corporation" is the bad guy.

    When you make it more expensive for corporations (taxes, minimum wage, regulations) they either pass it on through the price of their product or they reduce their biggest expense - employees. In both cases it makes it worse for the people that the politicians are trying to help.
     
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  4. GenSeneca

    GenSeneca Well-Known Member

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    They aren't trying to help them, that's a smoke screen, they are trying to bribe them with promises and sell them on actions that make their constitutents more dependant on government.

    Min Wage laws truly are a case of cutting off your nose to spite your face.
     
  5. top gun

    top gun New Member

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    The fact is that left to their own devices and no government regulation or worker organization history shows that business owners often were not saints themselves.

    It was not uncommon for them to intentionally depress wages in collusion with each other affecting entire industries and also turn a blind eye to work conditions and workers safety.

    A minimum wage requirement is not overbearing when we look at the historically bad conditions that not having one allowed for.

    The birth of the Teamsters Union documents just how poorly workers were once treated in America.

    Before organizing in a truckers life, jobs were insecure, they were often forced to drive extremely unsafe trucks in need of major mechanical repair and poverty was commonplace. In 1900, the typical trucker worked 12-18 hours a day, seven days a week for an average wage of $2 per day. A trucker was expected not only to haul his load, but to also assume liability for bad accounts and for lost or damaged merchandise. The work left truckers assuming all of the risks with little chance for reward.

    In 1901, frustrated and angry drivers banded together to form the Team Drivers International Union (TDIU), with an initial membership of 1,700. The following year, some members broke away, forming a rival group, the Teamsters National Union.

    The Teamsters Union was founded in 1903. Originally a union that represented truck drivers.
     
  6. TheFranklinParty

    TheFranklinParty New Member

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    There is no doubt that once upon a time Unions and child labor laws were necessary to help us rise above the concept of serfdom. The reality is that those times are no longer a realistic part of our society. Just like the greedy business owners, the just as greedy union leaders took advantage of their own union brothers. They also ran companies right into the ground with unrealistic expectations while getting rich and powerful.

    Unionization and the minimum wage actually hurts the least trained unemployed worker because they have no way of overcoming their inexperience. They can't offer to work for lower wages. Literally they are locked out of gainful employment. This was shown by several case studies in Europe, Australia, and the Malaysia.
     
  7. top gun

    top gun New Member

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    We'll have to agree to disagree.

    The only reason we don't backslide back to some of the bad work practices is because of regulations outlawing them. Now I'm not saying that it would ever get as bad as it did in the 30's we have evolved somewhat as a society. And I'm also not saying at times Unions have been corrupted and in bargaining overplayed their hand.

    But on tally many more regular non-union business have been corupt in one way or another over the years than union ones. Mainly simply because the vast majority of jobs in this country are non-union.

    But I am certain that with no regulations younger and younger children would be working and there would be a sub class of pittance paid workers. You are being naive to believe that greed would not again cause this to happen.

    As far as Unions. There's nothing wrong with workers unionizing so they can collectively bargain. Also the Union is a pathway through apprenticeship for a blue collar kid to work his way up to a very decent living. In fact my best friend did this through the Masonry Trade.

    As far a the minimum wage there is a cut off point as to how low someone should be paid working a regular W2 job. This isn't about some kid mowing lawns or some high school girl babysitting on the side. Although if you think about it even those jobs a fair person would give minimum wage money for.

    IMO the idea that you'd be helping somebody by allowing them to undercut someone else by working for less than our minimum wage is on it's face weak on merit.
     
  8. GenSeneca

    GenSeneca Well-Known Member

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    You should read my latest blog post about regulations vs. laws... You might find that eliminating regulation isn't such a bad thing, our laws will protect our rights and eliminating regulations wouldn't cause us to devolve into the nightmare world that you've been convinced would arise as a result.

    But Don't Businesses Need to be 'Regulated'?
     
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