Minimum Wage Increase

Deleted User

The purpose of increasing minimum wage remains lost on me, as there seems to be no relation to reducing poverty by an increase of wage at the lowest level of the hierarchy in a business.
An increase in operation expenses due to paying the lowest workers more would result in forced compensation in order to maintain the level of profit.
Means of doing this may include:
⦁ Laying unnecessary workers off- Which would cause unskilled or new laborers to lack the ability to feed their families on what little they could have obtained before.
⦁ Reducing hours of working times, resulting in lesser paycheck- Similar situation as above, but to a lesser extent.
⦁ Increasing the prices of the products sold-Which would increase the cost of living for customers of that product.
Working with the last point, I have concluded that many more areas of the business are affected. Should the supplier (wholesaler, manufacturer, ect.) also be forced to increase their prices, then Business A would not only be force to increase their prices proportionate to their increase in paying wages, but also to have an increase in raw material cost or in terms of a retail business (which I believe to be the worst affected due to the length of the chain products must go through to reach final sale), retail products would hike in price.
However, due to the workers " increase" in wage, they now have the ability to afford such prices. Leaving them roughly in the same situation as they were prior to the wage increase. The impoverished remain impoverished, and perhaps add some to their group. The more established in the business will most likely not get any raises to compensate for the inflation, as they obviously make more than entry level employees. In turn, they will have to degrade and cut back in expenses, which then would decrease job growth as they will purchase less products, inhibiting growth in business.
Another conclusion I have drawn is that the standard of living remains mostly unchanged long term for the poverty stricken because of this circle that is being ran around with no end in sight. The purchasing power ratio of the currency remains roughly the same also. When they demand higher wages, then they are forced to pay prices directly proportionate to the rate of increase in wage. And in hopes of finally gaining the upper hand, they again plead for higher wages, only to be slapped in the face with higher prices or joblessness, and the circle continues on and on.
Thoughts?

Rich

Minimum wage probably has some effect on overall standard of living under certain circumstances, but its overall effect is minor in comparison to monetary policy which more than anything else creates the massive wealth inequality that we are experiencing today. Nothing can overcome the transfer is wealth being engineered by Central Banks worldwide.

Agustino

Another conclusion I have drawn is that the standard of living remains mostly unchanged long term for the poverty stricken because of this circle that is being ran around with no end in sight. The purchasing power ratio of the currency remains roughly the same also. When they demand higher wages, then they are forced to pay prices directly proportionate to the rate of increase in wage. And in hopes of finally gaining the upper hand, they again plead for higher wages, only to be slapped in the face with higher prices or joblessness, and the circle continues on and on.
Thoughts? — Lone Wolf

I quite agree with you. It's never going to be possible to be really well off from a job (excluding people who fight to reach very high up the corporate ladder). Nothing we can do can change that. Ultimately I think we should be switching to an economic system that favours small independent producers and entrepreneurship, much like Distributism. That can guarantee economic freedom for a lot more people.

Cavacava

↪Lone Wolf

The purpose of increasing minimum wage remains lost on me, as there seems to be no relation to reducing poverty by an increase of wage at the lowest level of the hierarchy in a business.

I think the concept is to provide a fair wage to hourly workers, a wage that can keep hourly workers above the poverty level. The federal minimum wage in USA is $7.25 cents per hour, and working 40 hours per week for 52 weeks yields an annual income of only $15,080 which is below the federal poverty line for families of two or more (Economic Policy Institute).

Part of the problem here is looking at the nominal value of money versus its purchasing power. On the basis of purchasing power the minimum wage in US peaked in 1968 at approximately $10.00 per hour in today's dollars.

BC

The purpose of increasing minimum wage remains lost on me... — Lone Wolf

Yes, it seems to be. The purpose of both an increased minimum wage and a living wage is to redistribute income downward to those who provide many of the less expensive products and services consumed by people across the spectrum of wages from poverty level to fifty rich.

There are two labor drives: One drive is to increase minimum wages (MW) and the other drive is to establish a living wage (LW).

Example: In 2014 the MN Legislature increased the MW from $6.15 hr (which was below the federal MW of $7.25 hr.) to $9.50 an hr, over a 3 year phase in. $9.50 hr. is now in effect and is for large employers. For smaller employers, the minimum wage topped out at $7.75. Beginning in 2018, the MW will be tied to inflation. It should be noted that as of July 1, 2017, the MN economy continues to do well, despite poor people getting a little more money.

A living wage (LW) is a more challenging concept, pegging the LW at a level required for one adult working full time to meet average expenses without assistance, and paying taxes. For an adult living alone, the LW = $11.53. For an adult with one child, the LW = $24.90. For two working adults with 3 children, the LW = $20 hr. for each of them. (Figures are from MIT for Hennepin County in Minnesota.)

True enough, a higher wage for fast food workers may well result in fewer jobs in that sector. There may be a small reduction in employees at a McDonald's, or an automated ordering kiosk might replace cashiers. However, minimum wages are generally across the board, so all employers are incurring this expense -- eliminating any competitive disadvantage.

Much more problematic is the case of cities establishing a living wage.

Example: Minneapolis has enacted a $15 living wage, to be phased in between now and 2024. I'm in favor of laws such as this, but they should be across the board (by state). Because Minneapolis is surrounded by 2,000,000 plus residents in its metropolitan area, this LW law might not work.

WISDOMfromPO-MO

Maybe I just happen to live in a good market, but as someone who is often in job seeker mode and frequently sees every job opening being advertised, I never see anything starting near the federal minimum wage. The state and local minimum wages are not higher as far as I know, so that is not the reason.

If there were tons of jobs paying only the minimum wage to start, I could understand why it is an issue. But such jobs seem extremely rare, so I don't understand what the problem is.

BC

↪WISDOMfromPO-MO

You might happen to live in a good market, or it may be that you are not seeking minimum wage jobs -- like office cleaner, fast food worker, fruits and vegetable canning factories, alfalfa drying, chicken slaughtering, or day labor landscaping, etc (I hope you are not).

Minnesota had a $3.50 minimum wage until 2008--it had been at that level for a long time. It went tup to $6.15. The metropolitan areas of MN are not particularly cheap -- not nearly as bad as NYC, Boston, or San Francisco, but high enough.

Deleted User

I quite agree with you. It's never going to be possible to be really well off from a job (excluding people who fight to reach very high up the corporate ladder). Nothing we can do can change that. Ultimately I think we should be switching to an economic system that favours small independent producers and entrepreneurship, much like Distributism. That can guarantee economic freedom for a lot more people. — Agustino

Distrubutism could work on a smaller scale for some industries, but I think it would be less efficient in terms of mass production. One would not necessarily have more economic freedom as one cannot guarantee product superiority or better marketing ability. A psychological factor into that would be that some people are incapable of self-management and need supervisor. Other than related issues like that, from what I have seen of it, it looks okay.

Agustino

One would not necessarily have more economic freedom as one cannot guarantee product superiority or better marketing ability. — Lone Wolf

Sure, but then economic freedom has little to do with product superiority and better marketing ability. Economic freedom simply means being able to earn a living by yourself, without having to rely on external aid such as jobs, etc. In a distributist system, people wouldn't be concerned with money - money would no longer be a main concern as it is in capitalism - rather people would be concerned with family, culture and other such things much more.

So distributism negates the logic of capitalism that everyone necessarily wants to make more money, and that greater production is always good. Greater production isn't necessarily good - we only need as much as we need, and not more. So instead of greater production and increase in profits, the goal is increase in economic freedom. This is also different than communism, because communism eliminates economic freedom in order to ensure equality. Distributism doesn't seek to ensure equality, but rather economic freedom for the largest number of people possible.

Deleted User

Sure, but then economic freedom has little to do with product superiority and better marketing ability. Economic freedom simply means being able to earn a living by yourself, without having to rely on external aid such as jobs, etc. In a distributist system, people wouldn't be concerned with money - money would no longer be a main concern as it is in capitalism - rather people would be concerned with family, culture and other such things much more.

So distributism negates the logic of capitalism that everyone necessarily wants to make more money, and that greater production is always good. Greater production isn't necessarily good - we only need as much as we need, and not more. So instead of greater production and increase in profits, the goal is increase in economic freedom. This is also different than communism, because communism eliminates economic freedom in order to ensure equality. Distributism doesn't seek to ensure equality, but rather economic freedom for the largest number of people possible — Agustino

Sounds like a fantasy now... in fact it sounds like true communism, where the "workers" own everything necessary for production and there are no authorities. True communism has never existed just as radical capitalism has never existed because neither one could possibly work. Money is necessary as long as human tendency as we know it exists.

Deleted User

↪Bitter Crank

Very interesting numbers. The living wage seems to be a practical concept.

Agustino

Sounds like a fantasy now... in fact it sounds like true communism, where the "workers" own everything necessary for production and there are no authorities. — Lone Wolf

I disagree, in true communism there is no private property. Distributism is based on private property, and maximising access to private property for everyone. When Karl Marx wrote about Capitalism, his real point was that Capitalism will inevitably end up in Communism, as the common man will, more and more frequently, be deprived of access to private property, and will effectively have nothing to let his descendents inherit. That's where we're actually headed at the moment...

Minimum Wage Increase

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