FoxwolfJackson Posted January 30, 2016 Share Posted January 30, 2016 A while ago that I had written a hybrid news article/mini research paper on Minimum Wage and the effects it had on society. I updated some information in the article to reflect current times as well as served as my own editor to remove any grammatical/typographical errors. I will take a moment to say that I don't hate minimum wage workers or think they "deserve" to be where they are. I think most of them just had drawn the short straw and are doing much in their power to live a normal life. This article is written mainly for the purpose of observing the effects of the law and initiative on a macroeconomic and society-wide basis using logical conclusions and statistical evidence. So, here's a topic that we can hopefully have a nice, rational discussion over and a copy of the article that I wrote (and yes, there is sources in the form of footnotes). ------------------------------------------------------------- Imagine going to the grocery store to buy a gallon of milk. The price has always been approximately five dollars for a gallon of whole milk. Today, however, there is an unpleasant surprise. The cost has skyrocketed to eight twenty-five a gallon. When inquired about the recent drastic change, employees can only reply that recent government law has increased the price of milk to increase profits for the struggling farmers. The utter dismay of discovering such an impediment creates an artificial rationing of a product that would otherwise not be rationed had it not been for a minimum cost for the milk. For one who owns a restaurant, this increase in price of a basic culinary ingredient would facilitate a price increase for products to equilibrate with the cost increase. In fact, in light of the recent rash of restaurant closings in Seattle, Washington, many have started to question what could have influenced these businesses in an area ripe with tourists. There has been a range of proposed reasons from various sources including bad location, misappropriation of space, or change of ownership; however, one of the most prominent and logical reasons has come under fire as to its validity. The ideal of a minimum wage, while created with the intention to ensure a living standard for employees, is inherently detrimental to the development of businesses by perpetuating a crippling handicap and preventing them from functioning at optimal efficiency. The recently passed and soon implemented fifteen dollar minimum wage increase has been cited as a harbinger of condemnation for many businesses in the Seattle area. The increasing cost and diminished returns will both condemn current small business owners and deter future aspiring entrepreneurs, the inability to justify hiring an entry level employee to make a bottom line, and the link to increased prices and unemployment are all current and realistically detrimental issues that are enabled by the enactment and enforcement of minimum wage. The first reason why the implementation of a minimum wage should be reconsidered is the ever increasing cost and diminished returns for businesses that hire minimum wage employees. In a civilized society which utilizes a monetary system, wages are a charge a person imposes upon an employer for services rendered. It is affected by the productivity of the worker coupled with the amount of competition in the skillset the person is offering. A person who puts in effort to design and develop a website will have a higher wage than a person who works as cashier at a retail store by virtue of the lack of competition in that field due to a specialty in the person's skillset. If one tried to artificially inflate the rate of their work by charging more than the competition or more than the product is worth, the individual would find themselves without work due to employers hiring another with the same ability for a lesser cost. Having a minimum wage imposes an artificial floor for wages that is increasingly detrimental over the years. Comedian David Angelo released a concise and well-written, albeit slightly comedic, video about minimum wage. In one part of the video, he displays a graph of the ratio food service wages versus productivity in recent decades; he explains how to interpret the graph before he goes on to summarize: “[...]that is the hourly compensation over productivity. It's rising, which means the cost of a food service employee has been outpacing productivity”[1]. There will soon be a day where the productivity of a food service worker will not be enough to justify the wages required by federal mandates. The Seattle Eater has interviewed many of the restauranteurs in the area, gathering their opinion on the minimum wage and the increase. Brendan McGill, owner and chef of Hitchcock Restaurant has stated, “[...] we run a very slim margin. To pay my staff more, I need to either buy worse food or raise my prices, and I'm not willing to start buying commodity meats or fish from larger, questionably managed fisheries”[2]. He goes on to say that those who earn minimum wage will continue to patronize his establishment as before, but those who make above minimum wage will be deterred from eating at his establishment because their wages are not increased. An increased price point would become harder to financially justify. In fact, he goes on to say that even he barely makes fifteen dollars an hour in the current economic climate. What fairness is there that the servers and cooks make more than the owner himself. Angela Stowell of Ethan Stowell restaurants believes that “[some] people will be okay with that but I worry that our guests will start spending less and going out less as they adjust to higher prices and their own wage compression.” In fact, Washington Restaurant Association's Anton estimates, “[...]the average restauranteur in Seattle has been making $28,000 a year”[3]. Workers in SeaTac, a small city near the Seattle-Tacoma International Airport have all griped about how, because of the wage increase, many other benefits have been stripped from them.[4] Therefore, it is safe to assume that diminishing returns provide less incentive for current and potential entrepreneurs to pursue opening a business. Furthermore, the inability to justify hiring an entry level employee to make a bottom line continually antagonizes the precarious balance of profit allocation. A restaurant makes a set gross profit for each item sold. Notwithstanding the previous example of decreased business affecting profits and taxes, the increases in wages would cut a larger slice of the profit pie. YouTube personality Julie Borowski addresses in a video Obama's proposal for a nine-dollar federal minimum wage by displaying how minimum wage instigates unemployment by simulating a hypothetical, yet highly probable conversation.[5] While the creation of a minimum wage was created to help create a wage by which any individual could provide for themselves the basic inalienable rights of life, liberty, and property, the fact that life is unfair does not justify a transfer of wealth or a restriction private property rights, such as wages. Minimum wage is inherently price control, which is more efficiently addressed through the markets rather than through government regulation. The Cato Institute explains the inefficiency best: “[...]when government adopts a price control, it defines the market price ... since supply and demand shift constantly in response to tastes and costs, but the government price will change only after a lengthy political process, the government price will effectively never be an equilibrium price”[6]. A perfect example of government prices stifling the equilibrium is the recent price hikes by Chipotle in the San Francisco area. San Francisco is slated to incrementally increase minimum wage until it reaches a fifteen-dollar minimum wage in 2018. However, in the past year, while minimum wage has gone up by fourteen percent, prices of the products in Chipotle have risen in a similar fashion. One entrepreneur website has contacted Chipotle and has “confirmed both the price increase and the role that the minimum wage hike played in the decision to raise prices”[7]. Allowing the markets to establish wages on their own would allow businesses to freely conduct business as they see fit, up to and including compensation for employees. Opponents of this concept would argue that business employers would take advantage of a lack of a wage floor to induce quasi-slave wages upon their employees; however, the fast food restaurant Moo Cluck Moo clearly shows that employers feel otherwise. “Employees at Moo Cluck Moo make $15 an hour or about $31,000 a year. In comparison, a rookie Detroit police officer starts off at about $30,000. A newbie teacher in Detroit starts around $38,000. A cub reporter at a daily newspaper averages about $28,000 a year”[8]. Co-founder Brian Parker has the theory that “[...]if he takes care of his employees, they will return the favor through hard work, loyalty and improved customer service.” His employees understand that their wages are unique and do their job to the best of their ability to keep their positions. Through strategic planning, a little business ingenuity, and a willingness to take a risk, Moo Cluck Moo has provided excellent customer service by providing a novel twist on the fast food industry. Such a great example of market innovation would have been inhibited or even destroyed by the imposition of a minimum wage. Workers would be highly unmotivated to work as hard as they do if they could work at any job for $15 an hour. On the other hand, supporters of a minimum wage would point to their favorite example of a viewed success of minimum wage. Australia is a land that has been claimed in recent years to have a minimum wage of sixteen dollars an hour with an unemployment rate of five percent versus the American unemployment rate of almost eight percent. The first issue arises from the issue of measuring unemployment between the two nations. The United States measures unemployment as citizens who are not employed but are searching for employment; Australia measures its unemployment as a person who has been searching for a job up to four weeks before the end of the survey week and were available to work in that week. When surveying Australians using the unemployment measures that the United States uses, the unemployment rate was to be almost ten percent.[9] It is also worth noting that, unlike the United States, Australia has a tiered minimum wage based upon age groups. When the minimum wages were increased in Australia in July of 2013, unemployment rose from 5.7 percent to six percent.[10] Although the change is nominal, studies have shown that only two percent of Australians work on minimum wage.[11] Furthermore, it is important to note that the cost of living in Australia is the third highest in the world, behind Norway and Switzerland. Overall, the cost of living is on average about fifty-nine percent higher than that of the United States, as the Deutsche Bank reports. “[The] figures also showed that the cost of non-tradeables like restaurant meals, shoe repairs or education rose 1.3 per cent. The Deutsche research confirms that many things that cost a lot more in Australia - such as hotel rooms, a flower delivery or a beer in a pub - involve labour, reflecting Australia's high wages”[12]. It is worth noting that the average wage of a restaurant server is close to the minimum wage at $15.22 an hour.[13] In addition, it should be noted that with the increase in wages in Seattle, many of those whom work minimum wage have been demanding less hours. “Evidence is surfacing that some workers are asking their bosses for fewer hours as their wages rise – in a bid to keep overall income down so they don’t lose public subsidies for things like food, child care and rent”[14]. While the rhetoric for increasing minimum wage was to provide a “living wage” for minimum-wage associates, it has been noted that in conjunction with workers asking for reduced hours, very few are weaning off the welfare system. “Despite a booming economy throughout western Washington, the state’s welfare caseload has dropped very little since the higher wage phase began in Seattle in April. In March 130,851 people were enrolled in the Basic Food program. In April, the caseload dropped to 130,376”[14]. What does this spell for the restaurants still open in Seattle as well as other areas that are picking up the minimum wage trend? There is a plethora of consequences from the new mandated minimum wage. The first would mean that businesses would have to adjust their finances accordingly to cope with the larger labor costs. The second would mean that the job market would be more strict and difficult to enter for new entrants into the American workforce. The third would mean that customers would have to pay more if they would like to patronize their favorite restaurants. For every action, there is an equal and opposite reaction; in the blinding rhetoric of helping those in the lower classes, the real consequence is punishing everyone else. The best solution is to abolish the minimum wage. Workers should be paid not by an arbitrary rate dictated by the state as a means to manipulate votes from those who selfishly have the most to gain from these minimum wage policies, but by what their range of skills and talents are. Those with rare and valuable skills will have a greater ability to demand higher compensation. Those who choose to flip burgers at “Gotta Have Beef” will probably not make a whole lot, but then what skill does it take to ask if you want your order super sized at the drive through window?Footnotes:[1]https://www.youtube.com/watch?v=kJR0DYs70f8[2]http://seattle.eater.com/2014/6/10/6209999/restaurateurs-weigh-in-on-seattles-15-minimum-wage[3]http://www.seattlemag.com/article/why-are-so-many-seattle-restaurants-closing-lately[4]http://shiftwa.org/sea-tac-workers-not-happy-with-15-min-wage/[5]https://www.youtube.com/watch?v=_jJQJRKnu2I[6]http://www.cato.org/publications/commentary/problems-price-controls[7]http://www.entrepreneur.com/article/248255[8]http://www.crainsdetroit.com/article/20130911/BLOG006/130919957/moo-cluck-moos-15-an-hour-story-starts-with-a-lesson-in-minimum-wage[9]http://www.roymorgan.com/morganpoll/unemployment/underemployment-estimates[10]http://www.tradingeconomics.com/australia/unemployment-rate[11]http://truth-out.org/opinion/item/5601[12]http://www.smh.com.au/data-point/rising-price-of-living-in-australia-20130426-2ik16.html[13]http://www.payscale.com/research/AU/Job=Waiter%2FWaitress/Hourly_Rate[14]http://www.foxnews.com/politics/2015/07/22/seattle-sees-fallout-from-15-minimum-wage-as-other-cities-follow-suit/ Quote Link to comment Share on other sites More sharing options...
Life Posted January 30, 2016 Share Posted January 30, 2016 I blame the hash but I couldn't make it through the entire article. I did read enough to understand the point you're trying to make and I can empathise a bit. But I do disagree when it comes to speaking about restaurants. I agree with the fact that raising a minimum wage is not helpful for a business and it make complete logical sense. Minimum wage is the absolute minimum that an employer should have to pay a worker with a minimum skillset to perform a job that takes minimum effort. Such as working as an attendant at a gasoline station. Why should that person be paid $15 an hour for not needing any skills or effort when $5.25 is enough for said person to theoretically support themselves? As someone who has made minimum wage as a skilled work (I'm a line cook), I refuse to sympathize with cashiers at burger joints that want to make the same amount of money as I do. My place of work is more demanding and requires more skill than punching numbers on a screen and saying "next". Note that this doesn't include actual waitresses and bartenders who provide service by waiting on the customer for more than 2 minutes at a time. However, you mentioned restaurants. And restaurants are money sinks if the goal is to be successful while providing quality food and service. They'll make some money but just enough to keep themselves afloat, not to expand without actively downgrading either food or service. I know this for a fact since I've worked at a few over the past two years including one that opened 3 weeks before I began working there. The amount of money that gets sunk into a restaurant is staggering (gas, water, electric, rent, repairs and maintenance, worker salaries, stock for both food and drink, taxes, cleaning supplies... the list just keeps going on and on). It's the worst place to talk about minimum wage since nobody (not even owners) make a lot of money if the goal is to keep quality up and going. So it's a fine article but you've brought a terrible example to the table. Quote Link to comment Share on other sites More sharing options...
Griffonite Posted January 30, 2016 Share Posted January 30, 2016 (edited) Very interesting read if I may say so. Let me start by addressing the $15 minimum wage. That will help no one, because all it does is raise employers' costs, and they will begin looking for ways to reduce them, and get their profits back up. One way is to raise prices, but that will not work for everyone. Aside from that, one of the most immediate solutions is to cut their payroll expense. This results in more people being unemployed. If a firm, say McDonald's, wishes to then hire an employee afterward, they are less likely to hire the kid who's still in high school, who may need that first job experience, than they are the person with two college degrees because, if they are going to pay that price for labor, they will want those with the highest skill possible. Besides this, an increase in wages of this scale will have a direct impact on prices of all goods and services in that area, because more money in general equals more spending which firms will try to capitalize on. So now, not only do you not make many people better off, you've actually made many more people worse off. This would result in an economy-wide dead weight loss. That being said, I'm not so sure that I'm in favor of abolishing the minimum wage entirely. Yes, it would make wages more flexible which would likely aid in the recovery from a recession, but wages aren't perfectly flexible. I've seen first hand the effect that sticky wages can have on someone's welfare (my mother works in a carpet mill and is making the same wage now that she was in 2000). Should minimum wage be abolished? I would say that it depends. I do think it would be better overall to have a non-binding wage floor and to let the market decide where the wages should be. The minimum wage would just be to ensure that companies don't have much leeway to unfairly take advantage of someone's financial position. Edited January 30, 2016 by Griffonite Quote Link to comment Share on other sites More sharing options...
Ansem Posted January 30, 2016 Share Posted January 30, 2016 why are 210 economists supporting bernie's plan to increase wage to that amount? http://www.budget.senate.gov/democratic/public/index.cfm/2015/7/top-economists-are-backing-sen-bernie-sanders-on-establishing-a-15-an-hour-minimum-wage i am against this but i really dont have any counter arguments when my friends bring up this fact. Quote Link to comment Share on other sites More sharing options...
dondon151 Posted January 30, 2016 Share Posted January 30, 2016 (edited) i get the impression that $15/hr min wage is required to offset the cost of living where costs of living are high. but if you're talking about some guy working at a mcdonald's in the middle of iowa, my gut feeling is that $15/hr is way too much. even where i live, a week's worth of wages at $15/hr (assuming 40 hrs) is more than enough to pay my monthly rent and utilities. Edited January 30, 2016 by dondon151 Quote Link to comment Share on other sites More sharing options...
Phoenix Wright Posted January 30, 2016 Share Posted January 30, 2016 there's a few questions that i have: what is the goal of a min. wage? do we want our citizens to live comfortably, regardless of skill level in their work? are some "doomed to fail" in our system, and therefore deserve help to stay afloat? i think the goal of a minimum wage is to protect employees from business practices that care more for profits than the well-being of the employees. i think it should exist, without a doubt. the second question is more subjective. does a cashier at burger king deserve to live comfortably? i think they do. the way any economic system is designed requires that people fail, due to limited resources. because of this, i think help is a necessary component of a healthy economy. i don't think $15 is too high, but that's only because of things like :smug:'s link. in san francisco, $15 is necessary, in some small town in nebraska? probably not. but if the data shows that it's not much of a problem, then i don't have a problem with it. Quote Link to comment Share on other sites More sharing options...
eclipse Posted January 30, 2016 Share Posted January 30, 2016 Why not have minimum wage scale to median income or something? (actual question, because I live in an area with a high cost of living) Quote Link to comment Share on other sites More sharing options...
Life Posted January 30, 2016 Share Posted January 30, 2016 why are 210 economists supporting bernie's plan to increase wage to that amount? http://www.budget.senate.gov/democratic/public/index.cfm/2015/7/top-economists-are-backing-sen-bernie-sanders-on-establishing-a-15-an-hour-minimum-wage i am against this but i really dont have any counter arguments when my friends bring up this fact. Same reason why a lot of countries bought into the idea of Communism really hard. It sounds excellent in theory but that's all it is. Theory. Maybe it'll work in actuality. Maybe it won't. There are arguments for and against this and both are logically sound in certain aspects. I'm all for raising minimum wage but a 200% increase is not feasible in my eyes. If I follow the logical path, it leads me to inflation. Quote Link to comment Share on other sites More sharing options...
CyborgZeta Posted January 31, 2016 Share Posted January 31, 2016 (edited) I don't oppose a minimum wage, but $15 is too high. Especially considering what minimum wage jobs generally are. Edited January 31, 2016 by CyborgZeta Quote Link to comment Share on other sites More sharing options...
Phoenix Wright Posted January 31, 2016 Share Posted January 31, 2016 why does it matter what the job is? working 40hr weeks for the rest of your life doing mind-numbingly boring work for decades doesn't sound like something anyone wants to do. Quote Link to comment Share on other sites More sharing options...
Topazd Posted January 31, 2016 Share Posted January 31, 2016 (edited) jesus christ Edited May 18, 2018 by Topazd Quote Link to comment Share on other sites More sharing options...
Augestein Posted January 31, 2016 Share Posted January 31, 2016 Both. It's harmful because having a minimum wage increase that's above the costs of living can cause other prices to become inflated as well, and of course, people that make above minimum wage are hurt by an increase or even the existence of minimum wage. IE, if you're making $8 an hour, and the minimum wage goes from say $7.25 to $8, and you don't get a pay raise when minimum wage higher, all the increase in minimum wage did was effectively made your life more difficult. You no longer make 75 cents over the minimum wage, and instead make the exact same amount. With the price redistribution that occurs when employees receive a universal pay increase, people that make above it are given no benefits to the actual floor increase. Sure, if you're making $40 an hour, the effect it'll have on you is minimal, but the closer a person makes to minimum wage initially, the more it has a direct affect on your spending habits. It's helpful, because it forces companies to give people enough money to *reasonably* live. This means that you cannot be paid something ridiculous like $0.01 an hour and be expected to even bother with such a job. The issue here is the *reasonably living* aspects. Minimum wage is by no means reasonable for living. A person cannot realistically survive on minimum wage alone without some form of assistance-- be it the government, or a group of people combining their funds AND living spaces. And with the whole thing with Obama saying that full time is 30 hours a week (though most higher paying jobs ignore this nonsense), jobs have left employers more apt to give people just 30 hours, or in some cases, 29.5 hours... Which hurt a lot of people and made it even more difficult to make ends meet. The issue is that higher ups need to be willing to take pay cuts and/or at least spread the wealth around-- because shortsighted people don't realize that the more people that have money, the more it is spent, and the more things are purchased and used, and there's only a finite amount of money that can exist (in theory, because the money you have is valued off of some form of object even though it doesn't always seem that way nowadays). Example: the job I worked at had the higher ups making tons of money, and they wouldn't give you more money or promote you, and would instead try to employ other people in place of potential promotions and then undercut the new position -- When I finally left that job, the person that they hired to do the same thing I was doing was paid less than what I was originally paid. It's why nowadays, people don't even bother staying with jobs because there are too many shortsighted people that do things like this and attempt to horde all of the money for themselves and refuse to give people pay increases or even realize that paying people a decent amount of money actually won't hurt them much just because net profits were valued at 150% instead of 175%. I know it sounds like I went in a bit of a different direction there, but that's the gist of it. It's neither inherently bad or good. If companies were willing to pay people reasonable prices and not worry about trying to make each year more green than the last, there wouldn't realistically be this issue, nor would the government even need to come in and say "you must pay your employees at least x amount of dollars." On the flip-side, companies would be less likely to horde money if they didn't have to constantly worry about the government or whoever is seated in power to have enough influence to randomly jack up their systems and force non-beneficial aspects on them. Quote Link to comment Share on other sites More sharing options...
Phoenix Wright Posted January 31, 2016 Share Posted January 31, 2016 But they're effectively jobs you could train a chimpanzee to do. You'd have to be exceptionally productive to justify remuneration of that extent on the employer's part. why? i don't understand why you think someone working full time job shouldn't be paid a livable wage. like, what do you want them to do--work several jobs? Quote Link to comment Share on other sites More sharing options...
Excellen Browning Posted January 31, 2016 Share Posted January 31, 2016 Same reason why a lot of countries bought into the idea of Communism really hard. It sounds excellent in theory but that's all it is. Theory. Minimum wage is one of the best concepts to have come out of industrial society. Being that most of the population generally had a choice between starving or starving less while working 14+ hour days, and the realization that that is just shit (and a direct effect of classical/liberal economic theory in practice). Or otherwise, that any earnest attempt at free economy(the entirety of industrial era Europe and America per example) was at best such a violent equilibrium it destroyed almost as much (or more than) as it created. And if the economy was on a downswing, there were no restrictions on how much you could cut salaries. Quote Link to comment Share on other sites More sharing options...
Topazd Posted January 31, 2016 Share Posted January 31, 2016 (edited) ain't it a lovely phase Edited May 18, 2018 by Topazd Quote Link to comment Share on other sites More sharing options...
CyborgZeta Posted January 31, 2016 Share Posted January 31, 2016 why? i don't understand why you think someone working full time job shouldn't be paid a livable wage. like, what do you want them to do--work several jobs? Go back to school, learn some new skills, build experience, and get a better job? Quote Link to comment Share on other sites More sharing options...
eclipse Posted January 31, 2016 Share Posted January 31, 2016 Go back to school, learn some new skills, build experience, and get a better job? Some jobs are required, and they are unskilled. What do you think would happen if all the janitors disappeared? Do you think these people should be paid enough so that they don't have to work three jobs to stay afloat? Quote Link to comment Share on other sites More sharing options...
CyborgZeta Posted January 31, 2016 Share Posted January 31, 2016 Some jobs are required, and they are unskilled. What do you think would happen if all the janitors disappeared? Do you think these people should be paid enough so that they don't have to work three jobs to stay afloat? Lots of jobs are required, but unskilled labor is still unskilled labor. They generally have high turnover because they're not the kind of jobs to make a career off of; you work them until you can get something better. If you want to get paid more, you're pretty much expected to go back to school. I mentioned earlier, but I'm not opposed to a minimum wage or anything. It can be adjusted depending on the cost of living in an area, but I think $15/hr is too high. Quote Link to comment Share on other sites More sharing options...
Ansem Posted February 1, 2016 Share Posted February 1, 2016 I mentioned earlier, but I'm not opposed to a minimum wage or anything. It can be adjusted depending on the cost of living in an area this seems most sensible but what i do not understand is why it has not been implemented yet. this isnt the first time this has been discussed, im sure lawmakers spoke about this before, but im wondering if there is a cost to this implementation? perhaps people would want to move to different places that pay more? im not sure. Quote Link to comment Share on other sites More sharing options...
Skynstein Posted February 1, 2016 Share Posted February 1, 2016 Is this the late 19th century? Why are we making such questions? :D Minimum wage exists because the early capitalists hired people for extremely cheap, effectively enslaving them. Labour rights are definitely a difficult subject. By nature of our system, he who sells cheapest with good quality wins the race. In the modern world, this made companies outsource production to countries without any worker protection. It's definitely unethical, and since most people in the world don't care, or couldn't care less, these companies have a free pass for doing that. Quote Link to comment Share on other sites More sharing options...
dondon151 Posted February 2, 2016 Share Posted February 2, 2016 Go back to school, learn some new skills, build experience, and get a better job? you need money to go back to school bro Quote Link to comment Share on other sites More sharing options...
CyborgZeta Posted February 2, 2016 Share Posted February 2, 2016 (edited) you need money to go back to school bro That's what scholarships, student loans and FAFSA are for. Some jobs also help pay for employees who go back to school. There's also the option of joining the military, and using the GI Bill to go back to school. The minimum you'd have to serve is 4 years active duty, and 4 years in the inactive reserves. Edited February 2, 2016 by CyborgZeta Quote Link to comment Share on other sites More sharing options...
FoxwolfJackson Posted February 2, 2016 Author Share Posted February 2, 2016 (edited) So it's a fine article but you've brought a terrible example to the table. I admit, restaurants really weren't the best of examples, but the article was written right after Seattle passed its $15/hr minimum wage law and it was written in response to that piece of legislation. There definitely are better examples in the overall field that could help drive the point home better. There was a big discussion/debate going on over the rash of restaurants closing in the area and I figured it was a good time to write a little blurb on what my take was on the matter. That being said, I'm not so sure that I'm in favor of abolishing the minimum wage entirely. Yes, it would make wages more flexible which would likely aid in the recovery from a recession, but wages aren't perfectly flexible. I've seen first hand the effect that sticky wages can have on someone's welfare (my mother works in a carpet mill and is making the same wage now that she was in 2000). Should minimum wage be abolished? I would say that it depends. I do think it would be better overall to have a non-binding wage floor and to let the market decide where the wages should be. The minimum wage would just be to ensure that companies don't have much leeway to unfairly take advantage of someone's financial position. The problem with having any sort of minimum wage is that it forces companies to set a standard for what it expects from its new employees from the get-go. No employee should be expecting much from a new employee that's just out of (or still in) high school and has zero previous job experience. I don't think it's wrong for that employer to hire a young kid and pay them only $4 an hour... and as wrong as that sounds, here's the logic behind it. Most only take up unskilled labor jobs for extra spending money outside of their allowances. Some use it to help them buy their prom dress/tux, limo to/from the dance, etc. What's the harm in hiring them for that rate? They're not desperately needing the money to live. Plus, the benefit to starting low is it allows more incentive for rewarding good work ethic. If a high schooler is paid $4 an hour, but shows a great aptitude for learning how the job works and is constantly driven to do the best job they can, why not give them a $2.50 raise at their 60-day evaluation? If a new worker can potentially get a huge raise, then naturally they will do their best to get the best raise they can. With a small base, it allows breathing room to really motivate workers to giving their all to get that huge raise. Not to mention, the good worker is given a good reference for their resume AND gets job experience on their resume for future job applications. If the person is a slacker who does the bare minimum, they can get a $0.25 raise on their 60-day and be done with it. Plus, without a minimum wage, it allows flexibility for a starting rate. Most of the jobs I worked, pretty much every employee starts at the same rate. Whether it's a 17-year old who just got their first job, or someone who has had years of previous experience in the field, unskilled labor jobs will pretty much hire everyone at the same pay rate and give them approximately the same raises (give or take a dime per hour). In the above example, sure, the high schooler can start $4 an hour, but perhaps a college student with two years job experience in a related field can be hired for $6 an hour. After all, they're expected to have a better starting point than the high school student, due to having prior work experience. what is the goal of a min. wage? do we want our citizens to live comfortably, regardless of skill level in their work? are some "doomed to fail" in our system, and therefore deserve help to stay afloat? 1: The goal of a minimum wage (granted, I'm not a historian, so I'm merely taking a stab at it) was probably supposed to be a failsafe to prevent businesses from abusing labor and paying artificially low wages to maximize profits and to protect workers from unfair business practices. 2: Granted, this whole question/premise is a logical fallacy, but I'll bite anyway. Hypothetically, yes, we do want our citizens to live comfortably, but there has to be a balance and a reality factor in this whole utopian premise. The harsh reality is, no, not every citizen is going to live comfortably, as much as we would like to see it. 3: Everyone deserves help at one time or another. It is virtually impossible to be successful every moment in your life. I personally don't believe in the phrase "doomed to fail", because it implies that no one has control over their situation and fate. Life is what you make of it. i don't think $15 is too high, but that's only because of things like :smug:'s link. in san francisco, $15 is necessary, in some small town in nebraska? probably not. but if the data shows that it's not much of a problem, then i don't have a problem with it. First of all, the data already has showed that it is a big problem, as multiple sources in the article have pointed out. Prices for goods have gone up, restaurants are releasing employees or closing down, etc., etc. Is $15 an hour a necessity in urban areas with a high cost of living? Of course. However, wages are a contract between employer and employee; there is absolutely zero reason to have a third party artificially tying an arm behind the back of either party. Is $15 an hour a necessity in other places? Not all the time. It's all case-by-case basis depending on the area an individual lives in. why? i don't understand why you think someone working full time job shouldn't be paid a livable wage. like, what do you want them to do--work several jobs? For the record, the term "living wage" is probably one of the most cliche terms used by the political left's rhetoric to garner sympathy from the listeners, despite the fact it is also a logical fallacy and thus leaves a bad taste in some people's mouths. To give a pragmatic, practical answer without sugar coating? Yes, essentially. Many people actually do work two jobs in today's society. Some out of necessity, others out of the want to have extra money as a "rainy day fund" or to have extra to indulge in on their days off. Again, the reality of the situation is that after high school, people should be ready to face the world at large. Either they can go to college and rack up student loans (or get scholarships if they are lucky enough) to get a degree in a decent-paying field, they can go to a trade school and pick up a craft, or they can join the workforce and attempt to move up the corporate ladder from within. Those that are ill-prepared should not have to burden the rest of society because of their ill-planning. Perfect example of a parallel to this situation: The Aesop fable of The Ant and the Grasshopper. I counter your question with a question of my own: Do you think it is fair for a zero-experience high school student to be paid the same wage as someone who lives on their own, who may or may not have prior experience in the job field, and is struggling to pay their bills because there is an artificial floor in what is the smallest amount a person can be compensated for their labor? Is this the late 19th century? Why are we making such questions? :D Actually, it's the early 21st century, and we are making such questions because the pendulum has swung too far in the other direction. :P Minimum wage exists because the early capitalists hired people for extremely cheap, effectively enslaving them. So, we punish the companies of today for the mistakes made of the companies of the past? That is like sending a caucasian male to jail for slavery because the whites in the past used to own slaves. Edited February 2, 2016 by FoxwolfJackson Quote Link to comment Share on other sites More sharing options...
eclipse Posted February 2, 2016 Share Posted February 2, 2016 So, we punish the companies of today for the mistakes made of the companies of the past? That is like sending a caucasian male to jail for slavery because the whites in the past used to own slaves. Er. . . Given how companies act now, if they didn't have the various laws in place, do you think they'd treat their employees any differently than what happened in the 19th century? Because my internal pessimist says "no". Quote Link to comment Share on other sites More sharing options...
FoxwolfJackson Posted February 2, 2016 Author Share Posted February 2, 2016 Er. . . Given how companies act now, if they didn't have the various laws in place, do you think they'd treat their employees any differently than what happened in the 19th century? Because my internal pessimist says "no". There are many sociological factors today are not present in the 19th century that may give the internal pessimist some food for thought. The general individual today is somewhat more educated than an individual in the past. With schooling available to pretty much everyone in America, the general intelligence level of someone is a decent amount higher than it was back then. With that being said, a person who might be taken advantage of at one job can easily jump to another job. Without a minimum wage, the other job can simply say, "Hey, we will pay you an extra $1 an hour if you come over here. We'll even treat you better." and thanks to a lack of a minimum wage, payroll will hardly be as constrained as it is now to be able to hire such an individual. In fact, with lower wage rates, businesses can potentially hire more freely, driving down the unemployment rate. A win-win, if you ask me. The other factor is that wages are not the only compensation a job provides for an employee. The other major compensation is health insurance. Now, a company only has so much money it can spare to take care of an employee. If one of these factors is artificially mandated by the government, it upsets the balance of the other benefits. Perhaps a job at one place pays less than a job at another place, but the first place has better health insurance. Which place would you pick? I'm sure your answer might differ with someone else. With wages no longer hindered by regulation, companies can find creative ways to entice people to work for them and find their own rhythm on how to retain employees. Also, without a minimum wage, this would allow many startup businesses to be able to hire employees. Say, for example, a bunch of corrupt businesses tried to monopolize a town by working together to keep wages artificially low and not caring for their employees (say, for example, Wal-Mart and some other place)? What's to stop the locals from starting up small mom-and-pop shops to compete with those businesses? They can pay their employees the same rate (or potentially less), but give better benefits to the employees, including perhaps better health insurance (and health insurance to part-time workers like Trader Joe's used to), a better employee discount plan, private ownership stock options, etc., etc. Less government interference means the market can more naturally swing to equilibrate from any deviations in the balance between business and individual. Quote Link to comment Share on other sites More sharing options...
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