While it's certainly possible for businesses to follow these guidelines and recoup any lost revenue, it is not at all in their best interests to do so.
If that's so, why not just raise it to $100? Then we wouldn't have to raise it again for a while.
If that's so, why not just raise it to $100? Then we wouldn't have to raise it again for a while. | |
Because, Guggy dear, there are actually limits. Reasonable values for the minimum wage don't really change much - setting it to a clearly ridiculous value will impact businesses.
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Reasonable values for the minimum wage don't really change much - setting it to a clearly ridiculous value will impact businesses. So the trick is to find the "sweet spot" that will do great things for the workers without having a significant effect on the employers. I'm a little skeptical, but that's why I don't get to run the economy. | |
Actually, that is precisely it. Remember the old supply and demand curve from Econ 101? Well, it applies to labor, too. Unfortunately, without other factors, the price for labor rarely reaches the equilibrium point due to external factors. So wages are actually artificially low. What the minimum wage, labor unions, etc. should do is help reset the price point to an optimal area where labor price is optimized to demand so the monetary resources can recycle through the system (remember, most laborers are also consumers, so resources allocated to the will largely flow back into the system!) without getting it too high for markets to bear.
Consider this. There are some workers. Each one makes $1 per day producing widgets. Each laborer needs at least 1 widget per day, but would buy up to 5. Let's further assume each dollar spent will cycle 4 times through the system (a low assumption) and thus generate $3 dollars of wealth for businesses, society, etc. So, each day, they earn $1 and spend it on widgets, generating and additional $3 wealth per day. Now, what happens if we raise the minimum wage to $5? Well, those worker, not being great savers, spend all $5 each day. But we, as a consumer society, really like that because it generates an additional $15 in wealth per day! So, even with the same number of workers, costs don't go up as quickly as revenues for widget manufacturers and everybody is winning. The problem comes if you go too high- say to $6. Now, people are saving that $1, so the costs of producing widgets effectively went up. Of course the tiny amounts that are generally discussed in US economics are nowhere near the level it would take to disrupt the system. Remember, statistically speaking, US workers are some of the most, if no the most, productive in the world! Plus, many employers already try to skirt US labor costs by outsourcing labor or using illegal labor. However, this is not always done for the wage dfference, but for tax and similar cost avoidance. There are also a number of risks, but that is really beyond the scope of this comment. Gughunter wrote: Reasonable values for the minimum wage don't really change much - setting it to a clearly ridiculous value will impact businesses. | |
Several points:
1.) Would raising the min. wage fan the flame of illegal-immigration as buisnesses find it cheaper to hire south-of-the-border? Wouldn't southern America lose more jobs? 2.) Raising the minimum wage to a realistic level is fine, but making a habit of raising it continuously in small increments is bad for the economy (If I hire an extra employee today, tomorrow I may have to pay him more, so I wont hire him). Even Ronald Regan argued for a min. wage hike. 3.) Incentive in a capitalistic nation (which is the best kind of nation, IMO) is the grease which enables its finely tuned gears to spin. Without that greese the whole production comes to a halt. By forceing buisnesses to increase min. wages, we always run the risk of decreaseing incentive as buisnesses see it more profitable to go elsewhere. IMO much of Europe has gutted their own economies because they force buisnesses to retain crappy employees (i.e. France), and because they force high wages upon buisnesses who hire low skilled employees. Additonally, people should be aware of politicians who simply promise the most benifits because we always end up paying for those benifits from the treasury, which of course comes from tax revenue. But good news: Oprah solves Min. Wage crisis | |
1. Not significantly, and not in the long term. Raising the minimum wage to a sustainable amount will actually benefit business in the long run (as detailed earlier by various people in this thread), so they won't feel pressured to do illegal things to boost profits any more than they are now.
2. I disagree. Small, predictable changes are less disruptive. 3. I don't know about "finely tuned"... *cough* In any case, businesses already go overseas - and they're not always the minimum-wage ones. I'm not convinced that it would have much of an impact, for a reasonable min. wage hike. Voting for the politicians who promises the most booty is of course overly simplistic. You have to look at the social impact though. IMO, the economic impact should only matter to the extent that it affects quality of life. Of course that means it does matter, but I think people tend to forget that it's not an end in itself. Europe (western Europe, at least) has a pretty good quality of life; better than that of the US, on the whole. Money ain't everything. | |
Responding to #2, (hehe, I'm so mature), politicians are never predictable, and rarely follow their own rules. If, however, min. wage was left to a random panel (taken from high levels of society, not just any Joe on the street or politician) every so many years to determine what the min. wage should be, then I'd be all for it. But unfortunatly, raising the min. wage is always an easy way to secure votes which is of course contrary to the spirit of the republic which implores that politicians act in the interests for the people, not of the people.
(responding to paragraph at bottom, "Voting for the politicians", etc.) You may wish to look at the social impact of taking money from the treasury and re-distributing under the guise of various programs (healthcare, welfare, min. wage, etc.), but I see it all as lesser forms of socialism. I also see that's it's deceptively easy to increase those benifits in the supposed interests of the people, but much harder to take those benifits back in an elected government (or any government for that matter). I'm all for having these lesser forms of socialistic thinking in light doses, understanding that they are necessary evils needed to catch the unfortunate during times of need. However -- we should error greatly on the side of capitalistic thinking. A man who takes a risk and earns his money, deserves his money. A man who takes a risk and fails, should have some moderate umbrella to fall back on (welfare, min. wage, etc.), but that umbrella should not be so comfortable that he desires to stay there. Rather, it should barely sustain him so that he is driven to make himself more. This all might sound cruel and hard tacks, but coming from a rural American family whose been through some pretty dire straights (having a sherrif come to the door to evict us), I understand the necessity of working hard to earn my keep. I also understand risk and the fact that through all of my family's hard times, my father didn't believe in accepting aid from the government, and today is worth roughly 500-600% what he used to be. Yet, my father also went back to college -- got his degree (actually 2) -- and made something of himself. Which is the way it should be. | |
Rockinawsome wrote:
A man who takes a risk and fails, should have some moderate umbrella to fall back on (welfare, min. wage, etc.), but that umbrella should not be so comfortable that he desires to stay there. Rather, it should barely sustain him so that he is driven to make himself more. The minimum wage and welfare could both be increased by quite a lot and they would still not become comfortable to live on. At least in Australia, and I suspect elsewhere too, the "dole bludger problem" is largely a scare tactic employed by politicians. Anyway, don't people on the minimum wage deserve to be able to live with dignity? Currently they can't, and someone needs to do those jobs. Sure, it can't be too comfortable, or nobody would do any other jobs. Clearly I am more comfortable with socialism that you are. :-) I think the elements of capitalism in our societies are the necessary evils, not the other way around! At least we agree that elements from both camps are necessary. In an ideal world, socialism would work and we wouldn't need to worry about all this economy/wages crap. Given that it mostly doesn't (or, at least, it's inhumanly difficult to make it work), we can't have pure socialism. Therefore we need something like capitalism to provide an incentive. Pure capitalism, however, is not a good thing. It screws people over, big time, and not because of "laziness". So we need a balance. I agree that more capitalism than socialism is needed; but I do think that the US in particular has swung too far towards pure capitalism. | |
This is a nice pat response that gets trotted out every time the eeeeeevil Democrats trot out the prospect of a minimum wage hike. While it's certainly possible for businesses to follow these guidelines and recoup any lost revenue, it is not at all in their best interests to do so. It's not as though the proposed increase would instantly bankrupt every employer in America--if they chose to, most companies could absorb part or all of their increased payroll costs on their own, rather than bleeding employees or consumers to get it back. Why would they choose to? Because then when their competitors jack up their prices and lay off employees, they can steal all the competition's customers because they're now offering better service at lower prices.
Sure, they could lower their own prices or adopt policies for more abundant staffing, but these things don't attract as much attention as the negative publicity from layoffs and price hikes. And while it's true that eventually prices will start catching up with the minimum wage, it's also true that prices will keep going up even without minimum wage increases (that, after all, being the reason the eeeeeeeevil Democrats want to increase it in the first place--well, aside from being eeeeeeeevil and all.)