A reckless wager

[Crabtownboy]

An interesting, thought-provoking article on the minimum wage.

WHEN prices rise, demand falls. Exceptions to the most basic rule of markets are curiosities—the kind of thing an economist might bore you with at a dinner party. Set carefully, minimum wages can provide such an example. But policymakers must not assume this is a cast-iron law. Big rises in minimum wages are a gamble with people’s futures.

Modest minimum wages do not seem to sap demand for labour. Truckloads of studies, from both America and Europe, show that at low levels—below 50% of median full-time income, with a lower rate for young people—minimum wages do not destroy many jobs. When Britain set a new minimum wage in 1998 doom-mongers forecast that jobs would vanish. Employment proved resilient. Minimum wages help offset firms’ bargaining power over employees reluctant to risk moving elsewhere. They may even boost productivity and reduce staff turnover by making workers value their jobs.

Encouraged by this evidence, many are clamouring to make minimum wages far more generous. In America campaigners want the federal minimum wage more than doubled from today’s stingy $7.25 an hour to $15 an hour, or 77% of median hourly income. They have had some success; several big cities, including New York this week, plan to phase in a $15 minimum wage, and Hillary Clinton’s two rivals for the Democratic nomination support the policy (see article). In Britain the Conservative government is overruling the technocrats who usually set the wage floor to shift it from 47% to 54% of median pay. Germany has introduced a minimum wage which is reasonable in, say, Cologne but is worth a generous 62% of median pay in the poorer east of the country.

By moving towards sharply higher minimum wages, policymakers are accelerating into a fog. Little is known about the long-run effects of modest minimum wages (see page 66). And nobody knows what big rises will do, at any time horizon. It is reckless to assume that because low minimum wages have seemed harmless, much larger ones must be, too.

http://www.economist.com/news/leaders/21659741-global-movement-toward-much-higher-minimum-wages-dangerous-reckless-wager?spc=scode&spv=xm&ah=9d7f7ab945510a56fa6d37c30b6f1709

 

[Bro. Curtis]

Still waiting for you to tell us what an acceptable minimum wage would be.

 

[Crabtownboy]

Still waiting for you to tell us what an acceptable minimum wage would be.

The minimum at which you would be willing to work.

How about posting something intelligent concerning the article cited in the OP?

 

[Bro. Curtis]

You first. What is an acceptable minimum wage ? Not for me, but for everyone else

 

[targus]

Based on the title I thought that this would be about the reckless wager called Obamacare. :laugh:

And I too would like to know what CBT thinks that the minimum wage should be.

Higher? How much higher? And how does CBT come to that amount?

 

[Bro. Curtis]

I don't really think he cares. I wrote what would happen to America's special needs folks if the minimum wage goes to what Seattle and New York think they should be.

Funny how CTBoy argues ambiguous terms and will not get specific about it. I'm glad our savior wasn't so lazy. Social Justice Warriors only care about the illusion of caring.

 

[InTheLight]

Still waiting for you to tell us what an acceptable minimum wage would be.

The US full time median wage is around $55,000. Therefore, according to the article, at below 50% of this number would be south of $13.25 per hour. So let's say $12.75 per hour.

The current federal minimum wage is $7.25 (though some states have set it higher.) If it were to be set at $12.75 that would be a 76% increase.

Wages comprise about 20% of expenses for most fast food businesses that employ minimum wage workers. Owners of these businesses would pass along these costs to the consumer.

A quick and dirty calculation shows that a $10 pizza would cost $11.52 if the minimum wage were to increase to $12.75.

Service businesses that spend more than 20% on wages would hike prices even more. This increase would be devastating to manufacturing companies that employ assemblers at minimum wage.

 

[Bro. Curtis]

It will also devastate the human services field. I shudder to think of what will happen to those folks who need daily care.

Liberals have always been short-sighted.

 

[InTheLight]

It will also devastate the human services field. I shudder to think of what will happen to those folks who need daily care.

Liberals have always been short-sighted.

Yes, these are the ultimate service businesses and they would be especially hard hit.

 

[InTheLight]

Ironically, a rise in the minimum wage would hurt the purchasing power of people that are earning the minimum wage. They likely would cut back on "luxuries" like going to McDonald's because prices would rise. The price of groceries would rise since most stores employ a good number of minimum wage workers (cashiers, baggers, stockers, etc.)

 

[church mouse guy]

Personally, I think that a tax cut would help the poor more than an increase in minimum wages. Of course, the lower class no longer pays a penny to help the country so it would have to be a tax cut of corporate taxes so that corporations could give a raise to their employees instead of paying so much money to a corrupt Washington DC.

 

[Bro. Curtis]

I would agree 100%.

 

[Salty]

...A quick and dirty calculation shows that a $10 pizza would cost $11.52 if the minimum wage were to increase to $12.75. ....

and that price increase would amount to a 5-7 % decrease in sales -
So either lay off one or two employees or raise prices again.

How about this - let the workers be on commission, profit sharing or what ever you want to call it.

I'll tell you what would happen. They would find it wouldn't pay enough - and quit.

 

[Crabtownboy]

Personally, I think that a tax cut would help the poor more than an increase in minimum wages. Of course, the lower class no longer pays a penny to help the country so it would have to be a tax cut of corporate taxes so that corporations could give a raise to their employees instead of paying so much money to a corrupt Washington DC.

Most of the poor are not paying taxes now other than sales taxes. Maybe you mean cut the sales tax for them.

 

[Salty]

Most of the poor are not paying taxes now other than sales taxes. Maybe you mean cut the sales tax for them.

Sales tax is only for the local & State/Commonwealth govt.

Therefore some 40% of Adult American's are contributing 0$'s to the Federal govt.

I think Mouse guy is trying to point out the inequities of the tax system.

IMHO - EVERYONE should pay some income tax.

Think of it - if a welfare recipient saw 1% of his "entitlements" withheld for income tax!

If our military has to pay income tax ....... (which they do) (except in a Combat zone)