Higher Minimum Wage. Is it bad?

As a few other people have mentioned, after accounting for inflation our minimum wage has been much higher before. It peaked in 1968 at about 10.56 in modern money. It's much harder to get hard numbers about the cost of living though, so its difficult to compare 1968's cost of living to now, but I'm pretty sure people did fine back then. Australia's minimum wage is like 16 dollars I think, and if this site is to be believed the cost of everything is somewhere between 20 and 40% higher on average. There's probably a lot of things factored into that though. Part of the price discrepancy might be because they're (mostly) a desert island, which likely means they have to import a lot of things.

Anyways I really doubt that raising the minimum wage would have the kind of disastrous consequences some people seem to claim it would. I've heard supposedly intelligent economists fight vehemently for either side, so they aren't going to be able to convince me one way or the other. But we've done it a whole bunch of times, we will do it again, we will be fine. If we're going to have a minimum wage at all we might as well make sure its worthwhile. 15 dollars is probably stretching it, but I understand that number for a huge city like that where the cost of living is so high, nationally speaking I think we could stand to raise it a bit, and index it to inflation perhaps. 10 dollars seems reasonable in my amateur opinion.

I feel like national companies will overinflate prices just to disincentivize any other city from thinking of doing the same so they can say "See how bad it is to raise the minimum wage to a reasonable amount?" Cuz corporations are assholes.

You two are absolutely right, but the problem is with the implication that a mandatory minimum wage is the automatic solution. There are millions of uninformed Americans who are wholeheartedly in favor of a higher mandatory minimum wage to help alleviate the problems you describe. But the problem is that the question is presented as a binary one, "Do we increase the minimum wage, or just let poor people suffer?", without any consideration of other (potentially far more effective and lasting) solutions.

Some I've mentioned in this thread already. Curtail the rampant inflation that leaves one years' good wage earners in the lurch when their money is worth less every subsequent year. Separate school district funding from property taxes that inevitably create a downward spiral of quality, dooming poor children, and allow more choice from parents letting them choose the school that best fits their child. Increase the support and flexibility for small business owners and folks who'd like to start a small business, so that people who are stuck in low-income neighborhoods can work to improve their own local economy, rather than give their labor away in a totally different and uncaring part of town. And many other things.

But the crucial point is that, yes, the state of wages is horrible. But the acceptance of that fact needs to spur on investigation and action towards those meaningful changes I mentioned, and not inherently back a well intentioned but fatally flawed policy like a mandatory minimum wage.

That could certainly happen, but it's important to also consider the fact that a mandatory minimum wage is actually good for the biggest corporations, because it helps to destroy competition from smaller businesses.

Say the giant box box store and the local specialty store both sell greeting cards. They both pay their employees $8/hour. But the big difference is the money that's made by those employees for the business. The big box store can get their cards in huge bulk at a pretty cheap price, but the local store gets high quality handmade cards that cost much more, so their profit margin after paying the employee wages is far thinner.

When both of these stores have to increase those wages, who will hurt more? I'd say it's clear that the big box store has pricing wiggle room, as well as the capital to make more stores to sell more cards to cover the lost profit. But the local store has none of that, has no means to keep their income stable without raising the prices of their cards which would drive more consumers away, which all leads to them possibly being run out of business if they can't stretch their profits further than the rising costs of their employees.

So the policy that was created to screw the big jerky corporation for being jerks, ends up making them pay their employees more (which is good), but they've also been strengthened by having eliminated small business competition without having to even do anything themselves (which is horrible).

Now, in the case of the Seattle law, there is something of an exemption for small businesses. But the affects persist nonetheless. If that smaller store is able to pay smaller wages, who would want to work for them in the first place, and not just get a job at the bigger place with mandatory higher pay for the same work? And how could any small company hope to compete when they butt up against this threshold of suddenly having to pay every employee far more just to expand their business.

Basically, economic constraints to hurt the biggest players usually crush the smallest ones first.

The way I see it, raising the minimum wage is a short term solution to a long term problem. Best case scenario, it gives people the short term benefit of making more cash before prices eventually raise and catch up. Worst case scenario, it gives people the illusion that these problems are somehow fixed.

One of the real problems is that in America, the measurements in calculating whether or not you are in poverty are severely outdated. In the 1960's, the poverty line was made to be 3x the cost of food for a family of 3. Back then, food was around 1/3 of a typical family's expenditure, so the poverty line was calculated to be 3x the cost of basic ingredients for food. Obviously, times have changed and food isn't 1/3 of a family's expenditure. Now, they have to worry about rent, healthcare, car insurance, childcare etc...

So unfortunately, there are a lot more people who are going through hard times now - who don't even qualify to be in poverty.

@jasonr86: The federal minimum wage is $7.25. Some states have opted to raise the minimum wage on their own, but it has to be at least $7.25.

@joshwent said:

This already happens for a multitude of reasons already though. Like if the cost of paper went up, the greeting card business would find themselves with the exact same problem. If their business is incapable of adapting to something like increased wages for their workers, then they would be squashed eventually anyways in one of the other dozen likely scenarios where their margins might fluctuate. So while you are absolutely right that increasing wages would hurt small businesses, I think the problem is with the viability of small businesses, not with the wages themselves. That's a whole other separate issue that people should worry about.

Oh i dont deny the stability of the system. In fact that could be its greatest downfall. Theres literally over ten thousand pages of tax code laws. Alot of which is forgotten an unenforced, along with lots of laws. In some states sodomy is still illegal. Obviously its not enforced, but the law is still in place.

I don't think it'll be soon, but i think the gross about amount of power we give corporations and how they're kinda running things anyways will come to a head in the not too distant future. Again with my tin foil hat. With climate change coming to a head, and unprecedented levels of corporate/private power. I'm not saying its gonna happen soon, just within our lifetimes things are gonna get REAL BAD. I'm not saying it'll turn into a revolution or anything. I'm just saying its gonna get bad.

Maybe im a cynic or again just a tin foil hat wearing nut job, but i think its coming. Granted im too apathetic to really care much.

J-just destroy the federal reserve?

Even though I agree with you, most Americans believe it is an integral part of any Democracy. Of course, anyone outside of the United States knows that's bs, what with countries like Canada and Sweden thriving with Socialist Democracies, oh how my country's ignorance makes me sad sometimes :(

it should be called "living wage" not "minimum wage". Actually have a friend who's an accountant and he lectures me everyday about increasing minimum wage and how it'd help the economy, a lot of it is because it's the hot topic issue currently but I do feel minimum wage was never enough even 30 years ago.

I'll just re-post what I wrote about healthcare reform from another thread:

Trickle down economics is the theory that if a super rich person buys a house from a rich person, the rich person will then buy a car from a middle class person, who will then buy a nice dinner from a lower middle class person, who will then buy movie tickets from a poor person (or ideally, a young person just getting started).

I believe that the theory of trickle down economics can be true, but many times you just get someone who spends some of their money and keeps most of it in a bank, or in the stockmarket. There are arguments that even that money is helping the economy, but I don't care to argue that point either way.

Trickle down economics says that if the rich become richer, everyone underneath them financially will always do better. That's not what I'm suggesting.

I'm suggesting "shit runs downhill" economics. I'm suggesting that if you take from the rich, they will take from everyone they can to offset their loss.

I'm saying that if you cost a company money--no matter if they're already failing as a company, if they have just a little profit, or if they're seeing massive profits and they're hugely successful--in any case, if something hurts them financially, they will pass the burden down to everyone in the company.

Ultimately, I'm saying that a CEO can't say to their investors "well, profits are down because healthcare is getting a lot more expensive, but we're still making a profit and you should all be happy with that, even if you are making less money now from our company." But they can say "We are effectively streamlining our workforce" to sugarcoat the fact that they would rather fire a large portion of their employees than eat the cost of something that is going to lower profits.

What goes around, comes around - unless you have more money than you can possibly spend. Hence - every raise of income for the bottom 99% is a good thing (which includes your average joe blow millionaire). Whilst the rich getting richer is the worst thing. That money doesn't go around as it should anymore. It just becomes this oppressive influence of self-interest strangling the world economy dry. Or something like that.

Just what is it that you think billionaires do with their money?

Please ignore the insulting video title, but this is the argument we're debating here:

But even if you disagree with this reasoning--and I imagine that you will--surely you don't think that business owners are just going to "eat the cost" when it comes to a minimum wage increase, right? For that argument, see my previous post.

Henry Ford once famously paid his workers $5 a day because he wanted to make sure they could buy his cars. He created his own market, and the market is spending by the middle class, which he arguably helped create. (Edit: Sorta redundant, but I'm leaving it in.) The more money is transferred around through spending, the more of it everyone gets to touch. So, it's good for the economy for the people on the bottom to have more money. They tend not to hold on to it.

But, whatever... "war on the rich," talking points, etc.

Get rid of OSHA and fire up the coal factories again! Those lazy kids gotta go somewhere.

I'm a duel US-Switzerland citizen and my grandpa calls me a communist all the time because Fox news has told him that socialism = communism.

A large spike in the minimum wage is detrimental if middle class wages don't go up as well.

The type of labor that a $9 per hour job is usually quite different than a $15 an hour job. No company's going to suddenly give the person working a $15/hr job a $6 raise to normalize pay/performance ratio. The people making say... 40k a year? They may have a family. They may have college loans to pay off. Now on top of those financial responsibilities, those same folks find that local prices have gone up considerably because everyone is making close to what they make, yet do not have those same financial responsibilities. Because those same stores selling $5 cheeseburgers has to pay their employees 60% more, that $5 cheeseburger is now $8. Sales tax goes up from 6% to 10%. So that $5.30 burger is now a $8.80 burger.

When I bought my house, it was because rent was becoming crazy. Why? It was a renter's market. It was shortly after the housing crash and people had trash credit scores. Renters took advantage of this, as people who made a decent income needed a place to live. Because of this, my rent went up $300/mo in one year.

Rent and general prices will rise to meet current earning standards.

On top of that, do you really think McDonalds is going to keep say... 10 workers on shift X at $15 an hour? Touch screen kiosks are cheap, people are much more inviting to new technologies, and service with a smile? That went out of fashion in the 90's. If you can use a Freestyle machine to make a grape cherry vanilla coke, you can push the button that says Double Cheese Burger with a giant picture of the meal on it.

Instead of wanting free hand outs, there should be pressure on companies to help employees so there can be promotions from within. Company Y employs people at $9 an hour. After X time, offer assistance with schooling, perhaps create a program out of it where graduates of said program then get promoted from within. It'd create a work environment where people would want to do a good job, would want to better themselves, and if they were unsatisfied with their work environment, could leave with the skills and education to find a better job.

It's also a social problem. American society glamorizes stupidity and borderline rewards it at times. We'd rather buy something new than learn how to fix something. We'd rather pay someone to do something than learn how to do it ourselves. We'd rather get degrees in easy subjects and expect 100k out of college than grind through engineering degrees. Having families is a birth right rather than a responsibility. By the time kids are adults, they think that they're entitled to their iPhones, their SUV's, their 2000 square foot houses, and their 3 kids, rather than earning those things.

They would would need to pass a bill raising the minimum wage to something you could actually live off of, say $12-$15 per hour while simultaneously passing a bill making it illegal for the multibillion dollar corporations to raise their prices if they are still making a profit. So, you know, never. Like @joshwent said, the deeper answers to the problem are more subtle and more difficult to implement.

How would you feel if you were making $12.50 an hour and lost your job because there are much better people out there willing to do your job for $15?

It's going to happen a lot more than you would expect, anyone that isn't absolutely perfect is going to find a way to get fired for someone better that is willing to work for $15.

As the minimum wage goes up, so does the minimum bar to qualify for that employment. It used to be a joke that a college grad would settle for a minimum wage job; soon it will be the norm.

@tyrrael:

Huh.

It is good and bad....or neither depending on relevant frame of reference. What it is not is just "good" or just "bad".

The complaint that raising minimum wage will cost jobs is kind of junk because what kind of quality job are they creating if they can't live on that wage? There is no economics behind suggesting that it is better to employ many at a sub-standard, sub-living wage compared to one or a few at a better one. And there is no economics behind the idea that raising the minimum wage helps correct the chronic wage gulf (no longer a gap) between wealthy and not.

My personal take: As long as the Minimum Wage is set a reasonable level, which may include the scenario where it needs to be adjusted down, then it will have more positive and less negative effects. Raising the Minimum Wage to $15~ isn't some crazy level that will cause hyper inflation or people to buy new things they couldn't afford like sports cars or plastic surgery so it will probably do nothing to the economy.

Whilst a minimum wage is an inherently bad thing (employees shouldn't have to be forced to pay decent wage etc) it as a concept has stagnated in both the UK, where I live, and clearly in the US. Year on year the increase barely sticks with inflation, certain employers use it as a guide as what to pay their staff as opposed to the least staff should be paid, and it's now a large amount lower than the 'living wage'.(The amount needed to live without too much worry)

Whilst I am very much for an increase in the wage the poorest can earn, such a substantial increase, when forced by the government, doesn't really help anyone, it will merely serve to increase the inflation rate. Companies would rather raise prices than sacrifice their yearly multi-million pound bonuses to pay their staff well. Of course smaller businesses that's clearly not the case, and that's where another problem lies, how is the small business who plods along, happy to make their monthly bills, going to be able to pay their staff nearly double.

The only way such increases will ever truly benefit the people is if companies willfully choose to pay their staff a decent wage, and in a world of capitalism, that ain't happening soon.

This is the part that needs to change somehow; the disparity between what the people at the bottom of a company are paid vs. those at the top. I feel like some sort of a % difference cap would be the right solution. That way companies that wanted to, and could afford to pay a CEO multiple millions of dollars a year, could continue to do so, and those smaller businesses where the owner is also a daily employee would probably not have to make a change at all, unless the owner is somehow also paying themselves a ridiculous sum

I haven't seen one person mention the fact that Seattle's minimum wage of 15 dollars an hour doesn't fully go into effect until 2021. Its a gradual increase starting in 2015 (raising it to 10 dollars) and then being fully implemented by some companies in 2017 and then every business by 2021.

Source

The more you know just in case you thought about moving out there right away. Also note living within the City of Seattle is brutally expensive (something like 1500 for 1 bedroom apartment) but if you lived across the bay in Bremerton you pay almost half that (last time I look was between 800-900 for equivalent).

@sarahsdad:

That's sort of what happens in a union. At my clinic, we are a part of a union. Every 2-3 years we negotiate a contract and every employee, from reception to physician, is paid a flat rate which increases yearly with cost of living and with each step within the union (capping at the seventh step/year). In this model, as a therapist I'm payed less than a physician because I need masters for my job and a physician needs a doctorate. But my boss, whose title is 'clinical supervisor, also has a masters but is paid more than the physician because he has more responsibilities and takes on more liability. Everyone within the company, besides the owners, are in the union and though there are those that make more than others the gap isn't a difference between 5 vs 6 figure salaries. The only people making 6-7-8 figures yearly are the owners.

In all honesty the ones who truly get effected by this price hike are the local mom & pop shops in and around the Seattle area who probably can't afford the extra help. It does help the local Seattle population and forces some of the larger corporations to cough up the dough to their employees but in the end that'll probably just means less jobs and hours for those working non-salary.

Look, what I'm saying is that the whole world economy is rigged for capital gain. The goal of every enterprise, big or small, is to maximize profits. That profit translates directly into capital gain. In other words, those who have money, get more money. All profits are made on the backs, and often at the cost of the workforce. A piddly bonus hand-out is what most people can expect for their troubles, at the end of the year. And that's if the economy even provides them with a job and a livelihood. All in all, what I'm saying is that the current situation is unfair. Of course, life has always been unfair, and it's futile and ignorant to expect any better - I get that.

Anyways, imagine a global economy with a different focus. Shifting away from the selfish *the-more-profits-the-better* to, let's say, *prosperity-according-to-personal-productivity*, where-in the individual is both encouraged and enabled to be as productive as they can and want to be. Of course, that would preclude the few from owning the good damn planet. Considering this was once Eden, from that perspective, each and every son of a bitch out there stole from me. It's everyone's birthright to live a good life on terms that aren't dictated by the ceaseless demand by the privileged few for as much profits as they can possibly squeeze from the Planet Earth and its inhabitants.

If it wasn't for reason and cowardice, I'd be militant about this. However much I'd want to fight and hope for a better tomorrow, I'd buy it with calamity today. Living a comfortable life myself...

Yeah, most people I know have started migrating up north to Everett or down south to Tukwilla / Renton area. Seattle is getting to darn expensive to live anymore.

Full stop I think raising minimum wage is bad idea. As Joshwent said we need to focus on battling inflation. Our dollar is worth absolutely nothing these days and that is because of inflation.

Also many companies like Wal-mart promote from within. There are ample opperunties for even people with non collegiate degrees to actually make some money.

Uh, inflation is low. In fact one can say inflation in the US is shocking low. The US Federal Reserve is still is loaning out money at historic 0%~ and that hasn't caused inflation. If anything the fact the US Federal Reserve is still doing Quantitative Easing and it hasn't made inflation budge means that some penny ante Minimum Wage increase will do nothing to inflation.

Just deregulate all of it. Worked for the banks! You wanted to live in a cyberpunk world didn't you?

That's kind of the entire point of capitalism. My father came from a very poor family, and got a job working as a janitor in a hospital. He then married my mother, was about to start a family, and knew he needed to do something else. He ended up getting a different position in the hospital, sterilizing medial equipment. This job required no college education. He stayed there for many years and became very good at what he did.

He eventually started looking for another job, because he wasn't happy with the situation there anymore. It didn't make sense to leave a stable job for another at less pay, so he asked for more money, and I think he had over twenty years of experience at the time. The other hospital made him an offer, and he took it. After he did, the first hospital noticed how good of a worker he was, and how much their overall productivity and quality went down, so they contacted him and made him an offer for even more money.

As his experience, skills, and productivity grew, so did his value as an employee, and so did the price he was able to demand for his service.

The point of minimum wage is that it must provide a "living wage" for a person who is working full-time 40 hour week. That means you must be able to eat, rent an apartment, and have reliable transportation. If minimum wage does not provide living wage, it is too low.

Sounds closer to Marxist communism, if anything. "From each according to his abilities, to each according to his needs", and all that.

Sure, there is always a perspective that collaborates your opinion. Within the framework of your father's life and his perspective, everything worked out as it should. It doesn't always however. That's besides the point though. In the larger scheme of things, what of the people who profit most from the health care industry, and your father's work? How do they fit in your narrative? Like the moneybags behind big pharma?

I'm no profressor, so I won't even try. You may try of course, but I don't quite see how the privileged earn what they're getting. At worst, the privileged risk their privilege, whilst they gamble with everyone's livelihood, your father's included, for maximum profits. And that's the point. Your father deserves more for what he does, and the moneybags deserve nothing. And everybody deserves the opportunity to live a good life, like your father did - unconditionally and anytime - without profit factoring ever into it, unless the profit is living a good life.

• The great flaw of marxist communism is that it didn't value the basics over higher pursuits. It should have insisted that everyone, no matter their abilities and social standing, does first toil on the foundation of civilization. There-by earning the privilege to become more than a farmer/miner/ecetera, if one so choses. Like if everybody was a farmer in one's life, before one becomes anything other than that - nobody would ever starve.

• Everybody would have built their own foundation supporting their life, instead of building upon the works of others. At least if one attests a transitive quality to the labor done in the past, as a credit to the current times. You can be certain of one thing, were it not for the farmers, there wouldn't be a modern civilization. So why does civilization not insist on everyone doing their share of farming in life?

• Marxism paid too much respect to our differences, instead of first focusing of what we all have in common - like hunger.

Somehow I couldn't do paragraphs in this post, so this is how I made the wall of text legible.

@seppli:

I'd argue against that, but I've never understood just how the hell communism works. It doesn't help that it's never been practiced on a large scale.

Minutes later:

That seems to be an accurate statement.

@narujoe93: Wonderful.

At $9 an hour, that's $360 a week or $1440 a month. That person is eligible for assisted housing and food. Our government, with our tax dollars helps support people who would otherwise not be able to scrape by. There are scholarships with very low GPA requirements for those who need the financial assistance.

If $1440 a month isn't enough to get by, 56 hours of work a week is just shy of $1800 a month.

But there are systems in place that make sure people who are of lower income do not need to worry about food and shelter.

Minimum wage jobs do not exist to make a living wage, they exist as additional income. The high school kid, the retired worker, extra hours. Pressure should be put on businesses to reward employees who put in X time so that those who want to make a living wage at the local shop move on from clerk to a position that does earn a living wage.

$15 an hour is over 30k a year.

A grade/high school teacher's starting salary is ~30k a year. The bachelor's degree that's required to become a school teacher cost said person 4 years of their life, one of which they're not allowed to have a job as they work as an unpaid student teacher. Oh yeah, and the tens of thousands of dollars of tuition money, books, and student loans.

Why would anyone in their right mind chose being a teacher over working a cash register?

Government subsidized housing and food stamps are intended for people whose situation dictates that they cannot support themselves AND their dependents, or cannot work for any number of valid reasons beyond their control.

Hours worked beyond 40 per week are classified as overtime and employers are legally required to pay time x 1.5 for those hours. You cannot take OT in to account when arguing living wage.

Oh yes! The systems! Do go on about those.

Actually, by definition, minimum wage law does exist for specifically for the purpose of guaranteeing any person capable of working full-time in the country can support themselves at base minimum of legal pay rate.

You think 30k gross is a lot of money? What part of the country do you live?

I'm not going to dignify those last two paragraphs.

Socialism and communism can be used interchangeably sometimes (Marx used both words to apply to the same basic concept). Sweden isn't really a socialist country, more of a capitalist country with a strong welfare state.

@herbiebug:

Living wage is an odd concept. Aliving wage for a single person is different then a family. So the concept that a single wage fits all scenarios seems flawed. Here's another piece. The current statewide minimum wage in washington is $9.32. For a family, two parents working at minimum wage and two kids, they would be making $19/hr together. The mental health therapists in my union start at $20/hr. I can name 5 at that rate who support two kids, and the other partner doesn't work, and they are doing ok. Not great. They make sacrifices. But they make enough to meet this concept of a living wage.

@dancinginfernal: Hi, I'm a Canadian. I'm from Ontario, Canada.

Canada is not a socialist democracy. Are you crazy?

When did we start talking about Sweden?

Raising minimum wage is good. It's great in fact.

The problem, and it's kind of a big deal, is that the cost of living in many areas keeps rising as well effectively making that raised minimum wage pointless if you think about it.

@alwaysbebombing: Wow, sorry. I read "Sweden" in the post you were replying to and then misread "Switzerland". Stupid mistake. I guess the first half of my post is still a little relevant.