Where is America Headed?

[_cinepro]

Your average teen in America doesn't support themselves and their family. I've had some type of a job since I was knee high to a Grasshopper. But no, I didn't need it to support myself and my family. Paying me the minimum wage didn't spell poverty. Adults working for minimum wage spells poverty for their whole family. I can't think of a single time when raising the minimum wage actually decreased employment in average adults.

I agree. If you want to increase employment among the more skilled, educated, older, whiter and experienced workers, and decrease employment (and competition) from the less skilled, less-educated, not-white and less-experienced workers, the minimum wage is the most effective way to do it across the board.

Ironically, that was the original purpose of the minimum wage 100+ years ago. It was hoped by social reformers that raising the minimum wage would price "undesirables" out of the labor market. Even if the motives have changed, the effect is still the same.

For progressives, a legal minimum wage had the useful property of sorting the unfit, who would lose their jobs, from the deserving workers, who would retain their jobs. Royal Meeker, a Princeton economist who served as Woodrow Wilson’s U.S. Commissioner of Labor, opposed a proposal to subsidize the wages of poor workers for this reason. Meeker preferred a wage floor because it would disemploy unfit workers and thereby enable their culling from the work force. “It is much better to enact a minimum-wage law even if it deprives these unfortunates of work,” argued Thomas C. Leonard

Meeker (1910, p. 554). “Better that the state should support the inefficient wholly and prevent the multiplication of the breed than subsidize incompetence and unthrift, enabling them to bring forth more of their kind.” A. B. Wolfe (1917, p. 278), an American progressive economist who would later become president of the AEA in 1943, also argued for the eugenic virtues of removing from employment
those who “are a burden on society.”

[_Gadianton]

I read the article. Cinepro cited this:

It simply isn’t true that reasonable wages, decent labor protections and higher taxes on the rich would destroy the economy. Such were the norms back in the 1950s and 1960s when America’s growth rates were much higher.

There are statements like this in the article that are problematic to say the least. It's not just a matter of wages being higher, but why they were higher, obviously.

But the idea that raising the price of something won't decrease the demand for it is absurd.

But this isn't necessarily true either. It depends on the model. In a functional market it is absurd, but we can't just assume the model is a functional market and then explain how a market works as an adequate response. The author of the article makes the same mistake of assuming his model as what "economics" says and discounting market-based explanations as apologetics -- including globalization, which is a huge mistake. Anyway, he reveals his model here:

People have never been paid what they are worth, despite what the trickle-downer’s will tell you. They are paid what they negotiate. And working people have lost their ability to negotiate decent wages.

Union jobs that used to pay people middle-class wages and that delivered the job security and benefits that enabled a dignified, stable and secure life have been eliminated and replaced with minimum-wage jobs.

I believe the proper model for "negotiating power" as held by the employer is a Monopsony. If you look at that graph you can see that wages increase along with the amount of labor when moving toward competitive equilibrium.

It's easy to explain why a minimum wage will help or hurt once you've assumed a model, the hard part is figuring out what the model should be. I think wages are down primarily thanks to globalization, but I've had similar thoughts as the author of the article for a secondary factor but for a different set of reasons than he gives.

[_EAllusion]

Really? People in different countries and parties have in some cases made the choice of setting a minimum hourly wage (rather than an 'obviously better' solution) simply because they are economically ignorant? That simple, is it?

Yeah, I think so. For a long time, economists almost near universally viewed min wages as a near entirely bad thing. I think recent empirical research has led to more mixed opinion, though even then the by far dominant view is that it is a less desirable solution than other options. Yet, min wage agitation exists as a primary means to address economic inequality. Why? Because the idea of people making a wage they can live off of, despite more nuanced solutions, is very compelling to people.

Might it not be that they see their political and economic choices differently (for a start, they may have different tax systems - I won't argue with you about the US system, which seems interestingly complex, to say the least)? And are you quite sure that you can always succeed in separating those two kinds of choices? There are some quite strong reasons for suspecting that in some situations things are confidently claimed to be simple 'economic facts' when they are in fact simply political choices.

EIC's are fairly simple and can be incorporated into any number of taxation schemes.

I'm arguing that min wage laws are political choices borne out of economic ignorance. Objectively better options according to the very goals of min wage proponents can be achieved with other policies, but those policies aren't as politically viable. Political viability comes from how easy it is to sell a policy to voters. And it is a lot easier to sell living wages than it is progressive redistribution through the taxation system.

[_The CCC]

I have participated in such a debate before, where most of the participants are political conservatives. I agree that it is not a liveable wage. That is why (partially) we need subsidized housing, food stamps, food pantry, subsidized medical care, and other benefits, based on income. I do not label myself as either a political conservative or liberal. We need balance in everything.

That just increases the cost of government for the rest of us, and puts more money into the greedy business owners pocket. People need to feel they are making a contribution to themselves and to their society, and are not just takers.

[_The CCC]

EAllusion:

In other words Internalize all the profits, and externalize all the costs. Drumpf's model for paying people who worked for him. I'd be rich too if I didn't have to pay people who worked for me.

[_EAllusion]

EAllusion:

In other words Internalize all the profits, and externalize all the costs. Drumpf's model for paying people who worked for him. I'd be rich too if I didn't have to pay people who worked for me.

That's not at all what I'm saying.

A business not compensating someone more is not "externalizing the costs." That does violence to what that phrase means. Redistributing wealth through progressive taxation actually hits wealthy business owners, in aggregate, harder than min wages do. That's something to recommend it if you believe redistribution should be progressive. The additional cost of min wages do not distribute through society in as clean of a progressive manner. To the extent that increased labor costs result in price increases, that hurts low income people who did not benefit from the min wage increases the most.

I'm not sure if you believe that you got to arbitrarily set the pay of people who worked for you, but you didn't. The price of labor is normally above min wage laws. Min wages only effect a fraction of low-value labor.

[_Always Changing]

That just increases the cost of government for the rest of us, and puts more money into the greedy business owners pocket. People need to feel they are making a contribution to themselves and to their society, and are not just takers.

Not if there was a more equitable tax structure. I defer to Gadianton and EA, they are the resident experts in economics here here. I am a poor psychologist who avoided the study of economics, other than one elective in accounting.

[_Doctor CamNC4Me]

US population currently about 323 million. So 42.5 million is 13%. That does not seem an excessive proportion of a population to need some kind of help in getting by, does it?

It sure the “F” does to me. 13%, 42.5 million people, is a HUGE amount of people to be just farting away money on. Old? Fine. Legitimately disabled? Sure. You can saucer walker your way through WalMart? GTFO. No food for you.

The SNAP program costs $66.6 billion annually. Source:

Yeah. That's a lot of money. We could build, I don't know, 66 solar farms with that money.

Total US budget deficit was about $486 billion in fiscal year 2014. Source:

Yeah. We're SPENDING 3.6T. We need to make cuts.

You think that Food Stamps reduction would be the most obvious way of cutting that budget deficit? Why exactly? What alternatives are you willing to consider, and how much might they save? This kind of discussion deserves the cool and rational evaluation of alternative choices. We'll get nowhere useful by getting excited and indignant.

Cuts should be made in various areas to varying degrees. This is just one area. All spending needs to be brought in line with austerity in mind. The amount of money we're crapping out every year simply to service our debt is criminal, but the only way we're going to ideally make some headway on it is to pay down our debts. I mean, that'll never happen, but we should.

Anyway, your smarmy condescension is noted. And I'll also note your contrarianism really doesn't offer up any progressive ideas on how to reduce the overall debt. You only want to see our continuing obesity epidemic get bigger so you can sit back in Merry Ol' England, or Holland (same thing), and feel superior.

Look. If it were up to me I'd gut our military to about a 1/3 of its size, I'd tax the crap out of the wealthy, close all corporate loopholes, and fund universal healthcare for those wanting to opt in. I'd de-fund and cut some things while turbofunding others. And, yes, if cutting someone's food stamps by $60/month saves the federal government $33B per fiscal year I'd absolutely do it. You're also talking to a guy who'd freeze all cost of living pay raises, roll back wages on federal workers, and suspend foreign aid to various countries so I can employ drug addicts stateside building nature paths or whatever they can focus on for more than a day.

I figure I'd be less popular than Donald J. Trump and my life expectancy would be around the 100 day mark before some fat, entitled, federal worker scooty-puffed his way over to my motorcade and detonated a S-PBIED.

- Doc

[_subgenius]

Have opponents of minimum wage legislation commented on this point?

Walmart's business model is forcing its employees to use government services to just stay alive. This decreases Walmart's overhead by shifting it to the tax payers. It is not the only profiteers on the backs of its employees, and the rest of us.
SEE https://www.theatlantic.com/business/ar ... ps/309625/

It does seem quite a strong point. Of course one way out of that dilemma would be to cease to pay welfare at all. Somehow I don't think there is (yet) a majority for that, so for the foreseeable future an employer who pays wages below welfare standards to his full-time employees will always be able to relay on the rest of us giving him a covert subsidy.

Surely that is wrong?

I think it is incorrect to claim that employers are relying on welfare as some sort of subsidy, because they don't nor should they.
The idea that a minimum wage should be an option as the sole resource for a family of 3 or more is what should should be addressed. You're trying to treat a symptom and not the disease.

[_Chap]

Any response to DrC from me?

Yes: it's smiling and nodding, while I try to make sure that he doesn't get between me and the exit from the bar. I fear that he has fallen into the habit of assuming that shouting a lot about one's strong feelings is some kind of unanswerable argument: that is true only in that a lot of people will not bother answering at all, because it seems an unpleasant waste of time.

Subgenius is in a different register.

I posted:

Have opponents of minimum wage legislation commented on this point?

Walmart's business model is forcing its employees to use government services to just stay alive. This decreases Walmart's overhead by shifting it to the tax payers. It is not the only profiteers on the backs of its employees, and the rest of us.
SEE https://www.theatlantic.com/business/ar ... ps/309625/

It does seem quite a strong point. Of course one way out of that dilemma would be to cease to pay welfare at all. Somehow I don't think there is (yet) a majority for that, so for the foreseeable future an employer who pays wages below welfare standards to his full-time employees will always be able to relay on the rest of us giving him a covert subsidy.

Surely that is wrong?

He replied, in part:

I think it is incorrect to claim that employers are relying on welfare as some sort of subsidy, because they don't nor should they.

Well, if Walmart's full-time adult employees don't get enough from their work to live on, and they need to claim welfare to live, I agree that Walmart itself is not claiming welfare. But if there was no welfare, and Walmart's employees slowly starved to death, that might put a crimp in their business model, surely? That (as I think was obvious) was what was meant by saying that Walmart's low-wage business model was in effect subsidised by welfare.

The idea that a minimum wage should be an option as the sole resource for a family of 3 or more is what should should be addressed. You're trying to treat a symptom and not the disease.

Do you mean that people should not have three children if they only earn the minimum wage? Or what? I ask because I genuinely do not grasp what you are implying here.