Posted on 05/26/2004 9:49:37 PM PDT by aft_lizard
Ever thought that a minimum wage increase is good? I am sure most people at one time considered it, even a conservative or two, like me. But once logic and math sets in you realize that in reality minimum wage increases hurt. Lets do a little math game.
Lets say the poverty level is a hypothetical $20000 for a single person living on a minimum wage at $6 an hour.This man barely gets by but he survives with little extra comfort.And Lets say 10% of the population lives at this level.
Lets say another man who doesnt have a minimum wage job and receives $7.75 an hour. He lives fairly decent with enough money left over after every paycheck to enjoy some extra amenities. His yearly wage is $25000 a year. And lets say 10% of the population is also at this level.
Now we say alright the minimum wage is too low and it must be increased to 7.75 an hour. So now instead of having 10% at poverty level we just increased it, temporarily to 20%---you doubled the percentage of the population living in poverty.
At first things might look great, the increased wages will bring more money and more people buying things like TV's and other durable goods. But then eventually the jobs these people work for have got to make a choice. Increase prices to make up for the pay increase or lay people off.
Lets say a pound of ground beef increases to $4, a 2 liter of coke to $1.50 and so on and so forth. Business will more than likely continue on semi normal, maybe a slight decrease in sales but its made up due to the increased prices.
Now when you increase food prices across the board you hurt everybody, from the richest to the poorest, everybody has to pay this "minimum wage tax". You effectively drop everybodies standards of living, no matter what race or wealth you have. Overall instead of raising up somebody to increase there wealth, you dragged down the majority closer to the bottom. Something to ponder when you hear of a minimum wage increase.
I'm not an economist but also when the minimum wage goes up --- that extra employee you might have added to your payroll is less likely to get added --- that entry level job --- maybe some 18 year old who could be hired to sweep floors is going to cost too much to bother with.
Bunk
In theory a raising of minimum wages would result in increased prices, but generally we only see increased prices in times of "full employement" and when there's easy money.
The first problem we see with this document is it fails to take market forces into consideration, if say this was a period of high unemployement we would see raises in prices since the minimum wage would act as a floor. When we have a market floor it generally says there is a demand for labor at a price lower than this level but we chose to pay at this level for x reason. In a period of high unemployement there would theoreticly be some pent up demand for lower wages and since companies have to pay more they would be more picky about who they hire.
The problem is *most* people make in excess (greatly) than the minimum wage. Thus it only affects a small portion of the population.
The area that we see the effect in employement in regards to minimum wage is in the employement of minorities and youth just entering the market. This one segment of the labor pool is where unemployement is usually at it's lowest.
So to sum it up in theory it will cause an increase in prices, but that is rarely the case. (Call me when they outsource burgerfliping, which oddly generally pays more than the minimum wage).
bah, I should really not post late a night as I mix up my positives and negatives.
I don't think I will take an economics lesson from someone who thinks $7.75/hr equates to $25k/yr.
My public school math tells me that $7.75 = a little over $16,000 yearly income.
"there" should be "their".
SO you are saying minimum wage increases rarely effect the consumer prices in the general market place? But it tends to eliminate jobs by factoring in the companies need to comply with the wage standards by hiring fewer employees but higher quality ones? So what about the in between time? The period when wages go up yet employment may remain a constant. Does the company maintain prices and attempt to absorb the wage increases inside there current bottom line generally? Or do they start selective hirings and firings immediately?
Is the floor when you set a minimum wage that after a period of high unemployment the overall pay structure will not suffer and may even improve once the economy restarts hiring?
I know the percentages I was using were fairly high, but surely if you increase a minimum wage to a level closer to a current livable level. The ones closest to the new minimum wage are hurt more while the standards for minimum wage workers really havent changed. Am I wrong in this assumption?
He works 12 hour days.
What I'd like to see would be an abolishment of the minimum wage, combined with a major reworking of the welfare system so as not to punish people who earn some money, but not enough to live on.
Under the current system, someone on welfare who decides to take a $100/week part-time job will likely lose so much in welfare benefits that they end up with less than $33 more in their pocket each week than if they sat at home and did nothing. Under such a system, it'd not hard to understand why many people don't work.
Imagine, though, if someone on welfare who took a $100/week job would end up with an extra $75 in their pocket. I suspect a lot more people would decide that working a few hours was worthwhile. And if they decided they liked earning and having some money of their own, they'd work a few more hours.
Frankly, I'd rather have the government give $200/month to someone who's working at a low-paying job than give $400/month (or even $200/month) to someone who does nothing productive.
(7.75*40hours)+(7.75*1.5*14 hours OT)=$500.75*52 weeks=26000
I used to work a job at 7.75 an hour at 75 hours a week and lived very well off it.
All a minimum wage accomplishes is to make it illegal to work if you can't PRODUCE enough value to make it worthwhile for someone to pay you the minimum wage. Minimum wage just throws people at the bottom of the ladder out of work. That's all it accomplishes.
Can you imagine Ted Kennedy getting up and screaming: "It should be illegal for anyone who can't earn $6 an hour to have a job!" But that's what he's actually saying every time he gets up and screams about raising the minimum wage.
I own a small business and taxes suck. For every 4 paychecks you pay out to an employee you have to make one out for taxes !
So, the minimum wage increase also increases costs by this amount and gets passed on to you.
The dems want you to think theey want higher minimum wages for the poor but it really is more tax revenue that they can spend !
I don't think you will have the general picture until you can define who the "you" is in the statement, "when you increase food prices" .
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.