The 2nd Term - Round 2 - Amensty for Some, Miniature AR-15s for Others...

[Shirtless Guy]

Re: The 2nd Term - Round 2 - Amensty for Some, Miniature AR-15s for Others...

But, until you start posting studies, lets look at your answer. The "competition of labor" from your chapter 1 goes down to 4.50, so the NMU grads can still work there. Now, do you think in that case the market will dictate that the cost of goods sold will go down a similar amount? You avoided this question earlier, but I'll give it a second go. Why wouldn't they if everything works in the fish bowl you describe?

Lynahfan answered it for you...if McDs doesn't start charging less, the market will correct itself when another restaurant like Hardees or BK will figure out they can pay less and charge less and increase their marketshare.

Claiming that the minimum wage has anything to do with standard of living is just dumb. I still don't understand why a 16yo kid deserves a minimum wage, if you're worth more, you'll eventually get it after you prove you're worth more. Sure there are companies that will forever underpay for workers because they don't need skilled employees and can handle turnover. My family has been dealing with this since my mom lost her job a few years ago, most of the job offers she gets are for $10-12/hour when she used to be making $25/hr. How will minimum wage laws help her? The answer is they won't. If you try to implement a different "livable" minimum wage for full-time employees, companies that need to will fill up on "part-time" employees to meet their needs at a lower rate.

 

[mookie1995]

Re: The 2nd Term - Round 2 - Amensty for Some, Miniature AR-15s for Others...

Mookie you're making stuff up! 1) Nice try, but the point of Obamacare is to bend costs DOWN, not up. Therefore business would be paying less over the long haul then they would have otherwise. 2) Businesses can very well pass some of the costs along, or eat some of the costs, etc..

no no no.

papa john announced he was cutting back hours because his costs were going up (point be dammed, maybe later it'll be - but not yet). you typed, "so what, raise the price of pizza!"
now you type that people will brown bag it, or find alternatives if a value meal rises in line with a min wage increase.

don't work, mookie has a mind like an elephant. all goes in, and comes out when needed.

 

[5mn_Major]

Re: The 2nd Term - Round 2 - Amensty for Some, Miniature AR-15s for Others...

I'm a probiz guy who consults with executives on strategy...but Rover is closer to the answer than many of you obviously believe.

There are many costs that go against margins for firms that employ folks at minimum wages...largely restaurants, retailers and manufacturing. Low end labor is a significant one, but its accompanied by inventory, R&D, production costs, electricity/power, marketing, promotions, and rent/leases to name but a few. So in the end, 10% turns out to be a very small percent of total firm costs. Frankly management compensation also takes a pretty big cut...middle management just gets more sympathy due to more visibility from top management. And except for papa johns, its a fallacy to say that companies will automatically pass costs on to their customers. Prices are frequently inelastic...and therefore firms are more likely to pass on small increases that are hardly noticeable. And again, industry threats that they'll stop hiring are pretty much hogwash. Any executive that refuses to expand into a great growth opportunity because of a buck increase in minimum wage is ignorant and/or political and is a detriment to the organization they represent.

 

[unofan]

Re: The 2nd Term - Round 2 - Amensty for Some, Miniature AR-15s for Others...

no no no.

papa john announced he was cutting back hours because his costs were going up (point be dammed, maybe later it'll be - but not yet). you typed, "so what, raise the price of pizza!"
now you type that people will brown bag it, or find alternatives if a value meal rises in line with a min wage increase.

don't work, mookie has a mind like an elephant. all goes in, and comes out when needed.

Restaraunts were cutting hours of workers long before Obamacare to avoid calling them fulltime. Still others offered insurance to their part time workers, but it was too costly to actually be accepted. It just gives them something to blame this time around. The average cost of health benefits for Papa John's employees would've added something like a dime to every pizza. That just means he's a cheapskate, or a selfish bastard.

 

[mookie1995]

Re: The 2nd Term - Round 2 - Amensty for Some, Miniature AR-15s for Others...

Restaraunts were cutting hours of workers long before Obamacare to avoid calling them fulltime. Still others offered insurance to their part time workers, but it was too costly to actually be accepted. It just gives them something to blame this time around. The average cost of health benefits for Papa John's employees would've added something like a dime to every pizza. That just means he's a cheapskate, or a selfish bastard.

leave it to someone who has nothing to tell someone with that they're selfish

 

[Foxton]

Re: The 2nd Term - Round 2 - Amensty for Some, Miniature AR-15s for Others...

leave it to someone who has nothing to tell someone with that they're selfish

Castles are expensive.

 

[mookie1995]

Re: The 2nd Term - Round 2 - Amensty for Some, Miniature AR-15s for Others...

Castles are expensive.

orange slices for everyone!!

 

[SJHovey]

Re: The 2nd Term - Round 2 - Amensty for Some, Miniature AR-15s for Others...

I'm a probiz guy who consults with executives on strategy...but Rover is closer to the answer than many of you obviously believe.

There are many costs that go against margins for firms that employ folks at minimum wages...largely restaurants, retailers and manufacturing. Low end labor is a significant one, but its accompanied by inventory, R&D, production costs, electricity/power, marketing, promotions, and rent/leases to name but a few. So in the end, 10% turns out to be a very small percent of total firm costs. Frankly management compensation also takes a pretty big cut...middle management just gets more sympathy due to more visibility from top management. And except for papa johns, its a fallacy to say that companies will automatically pass costs on to their customers. Prices are frequently inelastic...and therefore firms are more likely to pass on small increases that are hardly noticeable. And again, industry threats that they'll stop hiring are pretty much hogwash. Any executive that refuses to expand into a great growth opportunity because of a buck increase in minimum wage is ignorant and/or political and is a detriment to the organization they represent.

Actually, I don't think Rover is even close. But I thought he was being at least partially facetious, so I let it be.

Companies like McDonald's don't just "eat it", as Rover said (no pun intended, I'm sure.) When higher costs get imposed, whether through some sort of mandate like an increase in the minimum wage, or perhaps the price of beef, they don't just shrug their shoulders, accept it, and "eat" those costs. They may in the short term, but they certainly don't in the long term.

Instead, they have two choices. Either increase revenues or reduce costs in other ways.

Unlike Rover's example, they're not going to have to raise the price of a burger to $10 to cover the cost increases. Even a tiny increase in the cost of certain items will cover most if not all of the increased wage costs, and we won't even hardly notice. But the price of our meals did just go up.

Or, McDonalds can reduce costs elsewhere. They can cut back on these entry level jobs. I saw on ABC News last night that in 2007, following the last increase, that's exactly what happened nationwide.

Or, McDonalds cuts costs elsewhere. Maybe on health insurance, retirement plans, etc...

But they certainly don't just "eat it."

The great fallacy of the minimum wage argument is that somehow this is about putting people into the middle class. That's a joke. Even at $9.50 you're still making less than $20,000 on a full time job. That get's you nothing.

The jobs that typically pay minimum wage jobs really fall into two broad categories. First, they are what I would call "gateway" jobs. It's your first job, as a 16 year old kid, that teaches you to show up on time, do what the boss tells you, and take some responsibility. You put it on the resume as you look for work that will pay you something you can actually live on.

Second, they're supplemental jobs. Something a spouse might work at to pick up a little extra income for the family. Maybe a second job to pick up some money for the holidays.

We should actually be taking steps to encourage people to NOT stay in these jobs as their primary source of income, because staying at that job just locks you into a lifetime of poverty.

Instead, we should be figuring out how we can create more jobs (and if that means allowing employers to pay less, then yes) so that people can develop work habits, get a good employment record, and move on to a better job.

 

[geezer]

Re: The 2nd Term - Round 2 - Amensty for Some, Miniature AR-15s for Others...

Geezer keep it coming please, because arguing with libertarians is like arguing with members of a cult! You need to post some of these studies of yours, complete with sources because I'm suspecting its off of the Ron Paul newsletter. Just saying "every study has shown..." is the sign of someone who's all bluster but doesn't want to back it up.

Now you're just making up lies to change the subject! I never said any of the things you accuse me of here, including the things you put in direct quotations. My mistake for thinking you would be willing to have a sensible conversation that challenges your party-loyalty-driven belief system.
Math being real has nothing to do with what any "studies" or "newletters" about economics might show. Math is already math. Why do you want a study to prove it exists???

 

[geezer]

Re: The 2nd Term - Round 2 - Amensty for Some, Miniature AR-15s for Others...

I'm a probiz guy

I know, and I'm an old-fashioned bleeding heart liberal who only once in a while happens to vote for a conservative politician.

edit: But with the Republicans threatening to return to the fiscal ultra-liberal ways of GW, it's probably true I won't be voting for an (R) anytime soon, anyhow. Libertarian is actually sounding pretty good when (D) and (R) are indistinguishable.

 

[FreshFish]

Re: The 2nd Term - Round 2 - Amensty for Some, Miniature AR-15s for Others...

The great fallacy of the minimum wage argument is that somehow this is about putting people into the middle class. That's a joke. Even at $9.50 you're still making less than $20,000 on a full time job. That get's you nothing.

The jobs that typically pay minimum wage jobs really fall into two broad categories. First, they are what I would call "gateway" jobs. It's your first job, as a 16 year old kid, that teaches you to show up on time, do what the boss tells you, and take some responsibility. You put it on the resume as you look for work that will pay you something you can actually live on.

Second, they're supplemental jobs. Something a spouse might work at to pick up a little extra income for the family. Maybe a second job to pick up some money for the holidays.

We should actually be taking steps to encourage people to NOT stay in these jobs as their primary source of income, because staying at that job just locks you into a lifetime of poverty.

Instead, we should be figuring out how we can create more jobs (and if that means allowing employers to pay less, then yes) so that people can develop work habits, get a good employment record, and move on to a better job.

This is a great post! thanks.

The fallacy you mention about the minimum wage is compounded today by the Earned Income Tax Credit. That is a far more effective way of getting money to people in low-income jobs than raising the minimum wage, for two reasons: (1) it only goes to people who are actually working already anyway, and (2) it doesn't cost other people a chance to get a job in the first place by pricing them out of the market.

So for people only to discuss the minimum wage in isolation, without also considering the overall context, it can lead to an oversight.

While I don't think the federal government should enact any nationwide minimum wage, and while I fully recognize that a minimum wage can price some people out of the market, I am also receptive to arguments that states could pass a minimum wage appropriate to their local conditions. The problem is that,, while in theory, state legislators would balance out the interests of all their varied constituencies and agree on an "appropriate" minimum wage, sadly it is unusual for state legislators to care one whit about what is actually good for their constituents, and as a result there is a bias toward setting the minimum wage at too high a level.

Unions certainly support a higher-than-appropriate minimum wage, since it reduces competition for jobs.* <strike>panderers</strike> Career politicians tend to approve a higher-than-appropriate minimum wage, since it makes them look good without having to bear the consequences of their silliness. The people who have the strongest interest in an "appropriate" minimum wage are exactly those people you describe: it "should be" at a level just below what would support subsistence living. People at minimum wage jobs would be, as you say, teens still living in their parents' house or quasi-retirees looking for part-time work to supplement their Social Security check; a minimum-wage job should never be something sufficient to support a family.

I'm not saying this because I'm some heartless conservative; I'm saying it out of my own experiences as a teen-ager back when the minimum wage was set at a more rational level. Most of my friends and I had minimum-wage jobs because it was worth it to employers in exchange for the services we provided (back then, it was just under $2 / hour; in today's world it would be a bit higher than that). today, teen unemployment exceeds 20%. It's hard not to posit a connection between a too-high minimum wage and excessively high teen unemployment.

Setting a minimum wage at an "appropriate" level helps people find jobs; setting the minimum wage at "too high" a level actually hurts people, it does NOT help them!

By the way, many businesses actually support an "appropriate" minimum wage too, because it relieves them of the responsibility of having to set the wage level on their own. It reassures them that all of their competitors also have to meet this wage threshold as well.




* at one time, unions tried to compete on quality: they actively advertised that you should hire a union plumber or a union electrician because they had to meet minimum competency standards and so you could trust them to do the job right. I'd be receptive to that approach. Union leaders have sold out union members though, so don't hold your breath wating for those days to return again.

 

[geezer]

Re: The 2nd Term - Round 2 - Amensty for Some, Miniature AR-15s for Others...

But, until you start posting studies, lets look at your answer. The "competition of labor" from your chapter 1 goes down to 4.50, so the NMU grads can still work there. Now, do you think in that case the market will dictate that the cost of goods sold will go down a similar amount? You avoided this question earlier, but I'll give it a second go. Why wouldn't they if everything works in the fish bowl you describe?

You're wrong again, you just didn't read my answer: not necessarily. Think of it this way: Setting a minimum wage ties your rowboat to a post. It is at risk of a wreck if the tide rises or falls while the boat is "artificially" held at that level. Now eliminating the minimum wage means your rowboat can ride the waves. Sometimes it might be higher, sometimes lower... but obviously you can't expect some kind of guarantee that it means prices will always go down. Markets don't work according to your whims.

 

[geezer]

Re: The 2nd Term - Round 2 - Amensty for Some, Miniature AR-15s for Others...

The bigger question is, if people (you know who you are) are never willing to question what their false prophets are telling them to believe, how will they ever learn anything new? Think on that for a bit. Open your mind to new facts.

 

[LynahFan]

Re: The 2nd Term - Round 2 - Amensty for Some, Miniature AR-15s for Others...

Markets don't work according to your whims.

But...bbbut...bbut...surely if the right people were in charge, they could just plan everything out, taking ALL variables into account, to completely optimize the economy, with no unintended consequences whatsoever, right? Right?

 

[5mn_Major]

Re: The 2nd Term - Round 2 - Amensty for Some, Miniature AR-15s for Others...

Actually, I don't think Rover is even close. But I thought he was being at least partially facetious, so I let it be.

This is a great post! thanks.

Yet Rover is pretty much accurate.

As I said, you can't make the assumption that all products and services are elastic because of one example. In fact it requires a significant understanding of competitive pricing dynamics to assure that your prices are indeed elastic. Airlines is an extreme case of a sector that will rip itself to shreds before it raises its prices. McDonalds has overwhelming loyalty with its target customer segment. Most companies do not have its advantages.

Companies can always use the excuse of minimum wage increases to raise prices when elasticity permits. In 2007, McDonalds did just this...raise its prices with the fig leaf of increased minimum wages. Ya know what happened? The company had a sizzling 80% rise in profits in 2008. Did minimum wage increases punish McDonalds? I think not. Were price increases merited due to minimum wage increases? I think not. McDonalds raises prices all the time...it did so 3 times in 2011. So price increases for companies like McDonalds happen frequently, are not world ending, and they'll be waiting for an excuse for another one. These expose shows depicting devastating results by tying price increases to minimum wage increases are typically agenda laden and not reflective of reality.

 

[unofan]

But...bbbut...bbut...surely if the right people were in charge, they could just plan everything out, taking ALL variables into account, to completely optimize the economy, with no unintended consequences whatsoever, right? Right?

And surely, just because you can sell tons of widgets means you can run a country well, too. Right?

I generally agree that a higher minimum wage curtails jobs, but for someone like fishy to say there's absolutely no reason for having one is equally absurd. At the least, it should be indexed for inflation, so we don't have to have this argument every 15 years.

 

[mookie1995]

...At the least, it should be indexed for inflation, so we don't have to have this argument every 15 years.

If only someone could correctly calculate inflation

 

[LynahFan]

Re: The 2nd Term - Round 2 - Amensty for Some, Miniature AR-15s for Others...

And surely, just because you can sell tons of widgets means you can run a country well, too. Right?

Heck, no. I wouldn't want Jack Welch or Lee Iacocca attempting to micromanage the economy, either. It's a fools errand, destined to fail.

I generally agree that a higher minimum wage curtails jobs, but for someone like fishy to say there's absolutely no reason for having one is equally absurd. At the least, it should be indexed for inflation, so we don't have to have this argument every 15 years.

I would be completely fine with that. Simple and predictable.

 

[mookie1995]

At the least, it should be indexed for inflation, so we don't have to have this argument every 15 years.

And when inflation goes down, will that cause an automatic decrease in min wage? Retroactive?

 

[Shirtless Guy]

Re: The 2nd Term - Round 2 - Amensty for Some, Miniature AR-15s for Others...

And surely, just because you can sell tons of widgets means you can run a country well, too. Right?

I generally agree that a higher minimum wage curtails jobs, but for someone like fishy to say there's absolutely no reason for having one is equally absurd. At the least, it should be indexed for inflation, so we don't have to have this argument every 15 years.

Because the minimum wage is artificial. Very few people earn minimum wage and increasing it doesn't help anyone. A 16yo kid working his first job in fast food does not deserve $7.25/hr, they may get there rather quickly based on the person but a person with a blank resume doesn't "deserve" any specific number. That's the whole point of this discussion and why we argue every 15 years. If there is a job that ANYONE can do and it doesn't require much skill and you really can't improve productivity much with experience, there is no point to having an artificially high wage required. Until an employee can prove they are worth more to a company, no one deserves a forced wage.