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Consequences Of Repealing Minimum Wage Rates.


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Consequences of repealing minimum wage rates.

 

If there were no minimum wage many additional lower wage jobs would be created.

The vast majority of those newly induced jobs would be what we now describe as sub-minimal wage paying jobs that do not justify the current $7.25/Hr. federal minimum wage rate.

 

It’s not inconceivable that the market price for such “sub-minimum” tasks may be as low as a half dollar per hour. How much can we pay for someone to straighten salvaged carpenter nails for reuse? We could reduce the price of transportation by replacing many NY City cabs and drivers with young men operating rickshaws.

 

[u.S. railroads have been in disrepair for over a quarter of a century. Our trains run at 50MPH but in Asia and Europe they’re running trains at 200 to 300 MPH. They have much fewer automobiles and consume less petroleum per capita but their public transportation is generally more wide spread and effective].

 

Do you think enabling rickshaws to be financially viable by eliminating our minimum wage regulations would decrease our transportation, energy and pollution problems?]

 

There are many job tasks that do not justify the minimum rate but they now exist because their performance is necessary to our public or private enterprises. Those jobs will continue to exist but their wage levels will plunge down to sub-minimum rates.

 

Sub-minimum jobs will be the vast majority of additional jobs created and (because many of those qualified to perform sub-minimum tasks were previously not qualified for employment at minimum wage rates), we’ll have a pool of eligible labor that will far exceed the number of those additional jobs.

 

The affect of those extremely poor paying jobs will ripple throughout our entire labor market. All labor compensation will be somewhat affected but the general extent of the effect upon a task’s wage rate will be inversely related to the difference between the purchasing power of the eliminated minimum wage rate and the job’s rate; (i.e. the more you’re earning, the less you’re hurting. That’s the meaning of minimum wage rate’s inverse affect upon all jobs’ rates).

 

Lower wage earners will all then be paid in wages of extremely poor purchasing power. Prior to the elimination of the minimum wage rate, many of those now earning the lesser purchasing powered wages will have been unemployed or not worked steadily but they will be joined by those who already had been the working poor and some who were previously getting by slightly better. There’ll be net increased needs for public assistance and our states can’t now handle the present needs.

That’s a scenario of increased national poverty.

 

I ‘m a proponent of an annually cost of living adjusted minimum wage rate similar to the annually COLA’d Social Security benefits.

 

Respectfully, Supposn

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Do you think enabling rickshaws to be financially viable by eliminating our minimum wage regulations would decrease our transportation, energy and pollution problems?

of course! do you not?

the more alternatives you offer to the means of a goal, the better.

Sub-minimum jobs will be the vast majority of additional jobs created and (because many of those qualified to perform sub-minimum tasks were previously not qualified for employment at minimum wage rates), we’ll have a pool of eligible labor that will far exceed the number of those additional jobs.

even assuming this is true, would you prefer our current level of umeployment?

Lower wage earners will all then be paid in wages of extremely poor purchasing power. Prior to the elimination of the minimum wage rate, many of those now earning the lesser purchasing powered wages will have been unemployed or not worked steadily but they will be joined by those who already had been the working poor and some who were previously getting by slightly better. There’ll be net increased needs for public assistance and our states can’t now handle the present needs.

hmm, how to answer this question in a way you would urderstand...

let's take two scenarios and you tell me which you would perfer;

a) many people employed but earning low wages.

true most people wouldn't be able to afford the latest gagets and gizmos, but few poeple are starving or going without basic needs.

b ) few people employed but earning high wages.

here, the state taxes the wages earned and gives it to the unemployed.

now, not only do you have a mass amount of people unable to work, but you also have them dependant on the rich earning wages.

to me, i would perfer scenario a.

Edited by phillip1882
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Welcome to hypography, Supposn! :)

 

Apologies in advance for stating the obvious in the following post, but often in these sorts of discussions, I believe the obvious needs to be stated.

 

let's take two scenarios and you tell me which you would perfer;

a) many people employed but earning low wages.

true most people wouldn't be able to afford the latest gagets and gizmos, but few poeple are starving or going without basic needs.

b ) few people employed but earning high wages.

here, the state taxes the wages earned and gives it to the unemployed.

now, not only do you have a mass amount of people unable to work, but you also have them dependant on the rich earning wages.

to me, i would perfer scenario a.

I don’t like either of these scenarios very much! :thumbs_do

 

It’s helpful, I think, to look at the broader question of what “good people” – let’s leave a detailed definition of what I mean by this term for later – expect and will tolerate from society. I think this amount to something like

 

“If I work hard, but not so hard I’m miserable, physically broken at a young age, or suffer some other dire eventuality, I expect to have a comfortable, safe place to live, enough to eat and drink, entertainment enough to avoid boredom or similar bad feelings, and the ability to provide for a few people whom I know – ‘family’ – too young or old, or otherwise disabled, to take care of themselves.”

I can’t think of a better term for this expectation than “the social contract”.

 

Absent political/philosophical indoctrination – something rare for a person in most of our societies to absent of – I don’t think most people care if achieving this expectation involves being paid well, poorly, or even at all. Monetary and economic schemes are, I think, a means to fulfilling the social contract. When nearly all people feel the contract is being achieved, they and other societal means are working well. When many people feel they’re not, they either are not, or these people’s feelings are being deceptively manipulated, likely to further some scheme (of a different kind than my last usage of the term) or another.

 

A system where people are guaranteed an hourly wage that guarantees the social contract is part, I think, of a good monetary scheme. This component of the scheme only works if the minimum wage is enough, vs. the cost of acquiring the part of the social contract following “I expect to have”. If, as has been the case in countries such as the US for about the past 100 years, the property and goods needed for this cost an increasing amount, the minimum wage must be increased for the scheme it’s part of to continue to work.

 

:thumbs_up Thus, I’m also a proponent of, as Supposn puts it,

an annually cost of living adjusted minimum wage rate similar to the annually COLA’d Social Security benefits.

Further, I don’t think an across-the-country single cost-of-living-adjustment is adequate. The COLA must also take into account differences in the COL for different places, in a way similar to how Medicare reimbursement of providers and hospitals does in the US now.

 

A minimum wage is only part of what this scheme needs to work, however. It must also guarantee work to all but the too young, too old, and disabled –guarantee that the “if I work” part of the social contract is a choice available to everyone. Achieving this, I think, is much harder than setting a minimum wage that guarantees a person with work the contract’s promised rewards.

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A system where people are guaranteed an hourly wage that guarantees the social contract is part, I think, of a good monetary scheme. This component of the scheme only works if the minimum wage is enough, vs. the cost of acquiring the part of the social contract following “I expect to have”. If, as has been the case in countries such as the US for about the past 100 years, the property and goods needed for this cost an increasing amount, the minimum wage must be increased for the scheme it’s part of to continue to work.

hmmm, i wish it were that simple. unfortunately, i think minimum wage causes more harm than good. let's take a brief example to demonstrate why. an 18 year old wishes to earn some money to buy a car. after mowing 100 lawns at a rate of 3.50 an hour for 30 days, he has the bright idea of hireing employees to mow lawns for him. he'll manage the equipment and pay them 2.75 an hour. he gets a bunch of out of work applicants. a professional lawn care service complains to the state that this gentleman is cutting in to thier business, and isn't following the mimimum wage rules. so the state sends in officers and siezes thier equipment.

now, in such a case, would you support or deny the minimum wage rules?

 

futher let's take the minimum wage rate itself. how exactly do you know what it should be?

yeah i realize there are market indicators, such as the price for a loaf of bread, but perhaps that price would come down if you got rid of mimimum wage. what means do you have of gaging that? how do you gauge what it costs a business owner to make a product untill he acutally tries making it to the best of his ability at the lowest possible cost?

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Certainly, not having a minimum wage would lead to lower unemployment, particularly among young people who did not graduate high school and have little experience. One of the values of a low-wage job you can get as opposed to a middle-wage job you can't get is that at least with the low-wage job you're employed, gaining experience, and building your resume'.

 

When I was a minimum wage worker I went through two minimum-wage hikes. What struck me was how closely my raises was followed by an increase in the prices of basic necessities like food and clothing. Now I understand that is to be expected when the labor costs of sectors that employ a lot of minimum or near-minimum wage worker go up.

 

In Hong Kong you have a lot of people working and a vibrant economy and culture, but the price they pay is some people working for very low wages. I think ultimately we have to accept that minimum wage laws are about what we value. Some of us would rather have someone on public assistance than work for very low wages, some of us prefer that everyone have the opportunity to work, even if it means having to work multiple jobs to get by. There is a way to have it both ways: government subsidy of wages, in which a minimum wage is set, and if you are making less than that, the government makes up the difference. It's not ideal but does change the mix of advantages and disadvantages.

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There is a way to have it both ways: government subsidy of wages, in which a minimum wage is set, and if you are making less than that, the government makes up the difference. It's not ideal but does change the mix of advantages and disadvantages.

unfortunately it's not that simple. its worse than ideal, you would acheive the oppisite of the desired effect. it's a basic law of economics: whatever you subsidize you encourage. in this case low wages. and the money the government gets is not free. its has to take it from productive sectors of the market, in this case, from wage earners over the set margin.

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All this Assumes that it is Moral, Desirable and Efficacious to have the Government actively promote what Statists refer to as: "The General Welfare"; and play an active role in the Economy in the pursuit of that goal.

 

The World is becoming increasingly full of Objectivists (Randists); Libertarians; Minarchists; Hard Money Advocates (Austrian Economic Theory) and Anarchists who will bitterly resent the Unspoken Assumption that is so glibly glossed over here......

 

And once The Assumption is Explicitly Stated, to Bitterly and Rancorously dispute it.

 

The OP seems Blissfully Unaware that such Points of View Exist.

 

Though nowhere near a Doctrinaire Objectivist; I see much Merit in Crabby Old Ayn Rand's demand that there be as Rigid and Far-Reaching Separation between Economics and State, as the Separation that The Extreme Secular Humanists (who I do not agree with, even a little) want to see between Church and State.

 

As a Minarchist I posit:

 

This will never happen.

 

People are too horns-waggled by the idea of "Government" to ever permit Lassez-Faire Capitalism.....

 

But we strive to approach the Ideal of Lassez-Faire Capitalism ever more closely.

 

Even if--Even if--Even if this resulted in Widespread Squalor and Misery;

 

It is till preferable to granting the Incredible Political Power that being authorized to hand out a Dole gives to the State.

 

Charity should be distributed through Voluntary Donations to Churches and Charitable Organizations.....

 

And if those "With" don't donate as much as some think they "Should".....

 

That is still no reason to Authorize the State to extort more Charity at Gunpoint (In the form of Taxes).

 

And I am not Theorizing out of Self-Interest.

 

I am very near the Bottom of the Social Scrotum Pole, and would be one of the very first to suffer, if we started passing Ethical Charity Laws {i.e. No Government Involvement }.

 

 

 

Saxon Violence

Edited by SaxonViolence
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let's take a brief example to demonstrate why. an 18 year old wishes to earn some money to buy a car. after mowing 100 lawns at a rate of 3.50 an hour for 30 days, he has the bright idea of hireing employees to mow lawns for him. he'll manage the equipment and pay them 2.75 an hour. he gets a bunch of out of work applicants.

IANAL, but I did years of trades work, so think I have some understanding of an important distinction applicable to this example: whether the 18 year old (let’s call him John, and say he’s working in a US state) is actually an employer with employees (let’s call them Bill and Carl), or in a partnership with other independent contractors.

 

If the former, John’s breaking the law if he pays Bill or Carl less than the local, state or federal minimum wage, and follows various other laws required of employers.

 

If the latter, John and his partners are not breaking the law, even if, for a 1-hour job that Bill does, Bill gets $2.75, while John does no work and gets $0.75, and Bill and Carl call John “boss.” As partners, it’s assumed they all agree to this arrangement: essentially, renting John’s equipment, and perhaps paying him for his service as a customer-finder and company manager.

 

Determining if a worker is an employee or independent contractor can be complicated. A key distinction is that John, Bill, and Carl are being paid for a piece of work – mowing a lawn – rather than working for an hourly wage. If John is really keeping track of the amount of work Bill and Carl does, and paying them an hourly wage, rather than just using hourly rates to estimate how much everybody pays and gets for a given yard, he may either misunderstand, or be willfully breaking, the law.

 

a professional lawn care service complains to the state that this gentleman is cutting in to thier business, and isn't following the mimimum wage rules. so the state sends in officers and siezes thier equipment.

now, in such a case, would you support or deny the minimum wage rules?

This sounds like an awful abuse of the law, not only by the complaining business, but by the police!

 

However, I’ve never heard of it actually happening. Can you cite a case of this actually occurring in a US state or territory, Phillip?

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When I was a minimum wage worker I went through two minimum-wage hikes. What struck me was how closely my raises was followed by an increase in the prices of basic necessities like food and clothing. Now I understand that is to be expected when the labor costs of sectors that employ a lot of minimum or near-minimum wage worker go up.

Another side effect was that people that actually invested in training and acquiring new skills and/or invested years in their company to earn higher wages than minimum took a sucker punch that put them closer to minimum wage or right at minimum wage...what a joy it is to end up right back where you started....or in my case worse off than you were thanks to not only taking a hit in spending power from the price hikes that follow minimum wage hikes but to also have debt added from student loans added on top.

 

Just because minimum wage goes up it does not mean wages of those that were earning close to the minimum wage go up.

 

So for example MW is 5 and it goes to 6 a great many (I'd be willing to say most) folks earning 6 do NOT get bumped to 7  to maintain their spending power.  In my case I was earning 8 when the MW was 5 (and change)over it's rapid climb to 7 (and change) my wages remained at 8.;I took on 150 a month in debt and an additional 60 a week in commuting costs to get to that 8p/hr from 6p/hr...so essentially with the rapid increase in food and fuel costs that followed I took a massive pay cut and had instead of offset the debt with better wages only increased my debt load. In the end M/w increases tend to punish those that invest time with their employer, work harder and learn more skills to obtain better wages.

 

Let's not forget that

 

(1.) the lowest paying jobs tend to be so for a reason...they require no real skills/education

 

(2.) do not earn as much revenue for the company if any as skilled positions (ex. sweeping the floors vs. assembling products)

 

(3.) are generally (generalizations are bad, I know) filled by persons with other revenue/support sources (via parents, disability, pensions, and social security);Ie. high school students, disabled persons and increasingly the elderly . Though in the present job market this generality is increasingly less accurate with these jobs;being filled by people unable to land skilled positions due to a lack of availability of skilled/semi-skilled jobs.

 

(4.) Increasing the base wage increases the cost of goods and services which reduces the purchasing ability of everyone from the bottom up which causes lower profit further reduced consumer spending which reduces profits which reduces the employer's ability to pay better wages and causes an increase in the cost of goods and services which reduces consumer spending power etc. etc. etc. round and round we go...Weeeeeeeeee!

 

(5.) all this eventually leads to businesses either closing or packing it up and moving to other countries where they can produce goods and offer services at lower cost (even with import duties and shipping costs). Further reducing available jobs at all levels (unskilled, semi-skilled, and skilled) causing more competition for the available positions and driving wages down in the process...An "employer's market" is a very very bad thing for wages.

 

Of course this aspect of MW driven markets could be remedied by adopting trade laws that make it more profitable to remain here and by forcing companies that dodge duty fees by having their offices here to adhere to the same labor laws at their overseas plants that they are expected to follow here....but that is another thread I think, with enforcing labor laws likely to be even more ineffective than it is here and here enforcement is at best nonexistent judging by the crap my employers have been able to get away with.

 

It should also be noted that there is a minimum amount people are willing to work for if welfare pays better than working people are more likely to chose not to work or take "under the table" jobs leading to unfilled positions at the bottom. (short of doing away with welfare, dramatically reducing it, or implementing some sort of work requirement to get it) which in turn would force employers to increase their bottom to get labor to fulfill their labor needs. Ideally a "Minimum Standard Of Living" (for simplicity's sake "MSOL") would be determined by region based on the costs of education, housing, food, utilities, and transportation in that region. Employers paying more than the MSOL for a region would get tax incentives that offset the higher wages.

 

Employers paying at or less would receive tax penalties (increasing with the difference in wages vs MSOL) regardless of where their company and labor are located. The funds from which would be used to provide financial assistance to laborers earning less than the MSOL. Unlike the traditional model of MW employers would have choice over their wage policy, wages would more likely reflect the cost of living in a given area, and employers would be more likely to offer wages that allow for more purchasing power beyond basic necessities resulting in more consumer purchasing which is of course beneficial to all involved.

 

Kind of off topic but related....Employers offering medical insurance should receive a tax break reflecting the cost as well... taxing anyone that pays for their or their employee's medical insurance is BS...regardless of how good a policy they have!

 

If anything they should receive a break reflecting the cost because they

 

(1). are not relying on govt. medical programs.

(2). are able to pay their medical bills, which offsets losses caused by those that can't or just don't

( 3.) tend to actually go to the dr's which increases the odds of catching health issues before they turn into more serious and expensive ones. Which of course reduces the cost to private insurance providers as well as govt medical providers.

 

That said I would love to see a tax and premium based system put in place that would allow literally anyone to purchase medical insurance at a rate based on what they can afford with those possessing a policy from a private insurer able to claim 100% of their premium as a deduction.

 

At first blush the biggest benefit would be a decrease in the cost of private premiums. An additional benefit would be employees having the ability to leave one job for another instead of being trapped by the need to retain their med insurance. (which would also likely help drive wages for the better by improving an employee's leverage to obtain better wages) Additionally it would likely lead to smaller businesses that could not afford to offer med insurance being able to do so.

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Consequences of repealing minimum wage rates.

 

One of the consequences of our current MWR, is that many of our corporations are creating jobs over seas where they can hire cheaper labor or services providers. So much for the Republicans cutting taxes for the so called job creators. We need guarantees that jobs will be created in the U.S. and they will stay here. One thing that could be done is not to tax any income made at lower than the minimum wage rate. This would help both the business as they could hire at lower than MWR and it would be good for employees as they will be able to take home more of their income and have more jobs available to choose from.

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You all, I iterate the elimination of the federal minimum wage would create many additional lower wage jobs. The vast majority of those newly induced jobs would be what we now describe as sub-minimal wage paying jobs that do not justify the current $7.25/Hr. federal minimum wage rate.

 

But the lack of a legally mandated specific minimal bench mark would be replaced with a market’s unspecific minimal bench mark amount. The unspecific amount would be the outcome of a “race to the bottom” and its purchasing power is severely less than the current legal minimal bench mark.

The minimal bench mark more or less affects all wages and salaries; the purchasing power of the median wage would be significantly reduced.

 

Despite the increase of jobs which to a very great extent provide compensation with less than the current minimum’s purchasing power, the elimination of the federal minimum would be economically net detrimental.Due to wages lesser purchasing powers (unless we significantly increase spending for public assistance, national poverty will greatly increase.

 

The purchasing power of the federal minimum wage now provides lncomes for most of our working poor which do not qualify them for public assistance. The elimination of the federal minimum wage would greatly increase our numbers of working poor and if those working poor do not receive public assistance, USA’s rate of “real” poverty will also greatly increase.

 

Respectfully, Supposn

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One cannot even afford rent on minimum wage in the Yukon even though it was recently increased to $10.30/hr, making it the second highest minimum wage in Canada.

 

Retail stores historically offer a starting wage that matches the minimum with opportunity to advance through tenure, experience gained and corporate education if one is inclined to seek a career with them.

 

Social assistance in Yukon pays more than minimum wage, making it exceedingly challenging for many businesses to attract and retain staff. Another barrier is the need for computer access as most companies are now asking for resumes on line and our corporation most recently went to on line pay stubs. Employees can access through their work venue if they require assistance or lack a computer at home or appropriately equipped phone.

 

Internet access is also ridiculously expensive in the Yukon as the ISP presently still retains a monopoly on all communications mediums. The CRTC recently allowed for competition but the rates have yet to be set as the present ISP owns all the infrastructure.

 

We are a competitive species and those who are less capable or willing to compete are falling further behind in the wake of the pace of technology today, as I see it.

 

The minimum wage will ever remain chained to profit and when the wage goes up, so will costs, negating any gains made. Also, when one's wage goes up, the taxes also go up. It's a treadmill anyway you care to look at it.

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Craig D, labor costs comparisons of similar products that can replace or substitute one for the other are factors that account for competitive advantages or disadvantages between the products.

 

Differences between the specialized labor tasks and/or the labor hours contributing to the creation of the products are factors of their labor costs.

 

To the extent that goods or service products of competing enterprises are all produced by labor subject to the same legal minimum wage rate, the minimum rate itself does not account for any competitive advantage between enterprises. In business the only advantages that count are competitive advantages.

 

Respectfully, Supposn

///////////////////////////////////////

 

arKane, you’re correct; globally traded products are not all subject to the U.S. federal minimum wage rate.

 

Other nations’ median wages are much less than ours. Eliminating our minimum wage would somewhat decrease our global trade deficit but it would still all be of net economic detriment to our nation.

 

Refer to the topic

of “Reduce the trade deficit; increase GDP & median wage”

 

Respectfully, Supposn

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One cannot even afford rent on minimum wage in the Yukon even though it was recently increased to $10.30/hr, making it the second highest minimum wage in Canada..............

 

.............Social assistance in Yukon pays more than minimum wage, making it exceedingly challenging for many businesses to attract and retain staff..................

 

Under the Rose, you argue our federal minimum wage doesn’t accomplish anything in Alaska. You’re describing a rate that’s apparently too low for Alaska.

Does the legal minimum do any harm? Would eliminating it improve anything?

 

Respectfully, Supposn

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arKane, you’re correct; globally traded products are not all subject to the U.S. federal minimum wage rate.

 

Other nations’ median wages are much less than ours. Eliminating our minimum wage would somewhat decrease our global trade deficit but it would still all be of net economic detriment to our nation.

 

Refer to the topic

of “Reduce the trade deficit; increase GDP & median wage”

 

Respectfully, Supposn

 

I wasn't really suggesting the elimination of the minimum wage. But using it in other ways to create more jobs in the U.S. by making us more competitive in the world market. Jobs could be rated and those that can't justify a minimum wage can be allowed to pay an agreed lower wage. At this point the government agrees not to tax those sub-minimum wages.

 

As it stands now employers won't hire anyone to do those jobs at the current minimum wage. While people may not be able to live off less than minimum wage, it could become very important to people as a second household income, where now they no second income and no prospect of getting employment at the current minimum wage.

Edited by arKane
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