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Old 05-10-2014, 12:03 PM  
Count Zarth Count Zarth is online now
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Should the minimum wage be raised to $20/hr?

Seems like that would provided everyone with a comfortable living.

http://www.cepr.net/documents/public...e1-2012-03.pdf

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Using wages as a benchmark, in 1968 the federal minimum stood at 53 percent of the average production worker earnings. During much of the
1960s, the minimum wage was close to 50 percent of the same wage
benchmark. If the minimum wage were at 50 percent of the production
worker wage in 2012 (again, using CBO projections to produce a full-year
2012 estimate), the federal minimum would be $10.01 per hour.

A final benchmark for the minimum wage is productivity growth. Figure
2 below compares growth in average labor productivity with the real
value of the minimum wage between the late 1940s and the end of the
last decade. Between the end of World War II and 1968, the minimum
wage tracked average productivity growth fairly closely.

Since 1968, however, productivity growth has far outpaced the minimum wage. If the minimum wage had continued to move with average productivity after 1968, it would have reached $21.72 per hour in 2012 – a rate well above the average production worker wage. If minimum-wage workers received only half of the productivity gains over the period, the federal minimum would be $15.34. Even if the minimum wage only grew at one-fourth the rate of productivity, in 2012 it would be set at $12.25.
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Old 07-25-2014, 10:22 AM   #256
suzzer99 suzzer99 is online now
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What happens when the assistant manager at McDonald's making $10 an hour is now making the same amount as his employees? You think he's going to expect a pay raise? And so on up the ladder.

I don't think there's any real doubt that a minimum wage hike puts upward pressure on wages at the lower end of the scale. Now you can argue that will increase inflation, force companies to cut back, etc. But again, history has shown both of those effects to be minor or non-existent.
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Old 07-25-2014, 11:35 AM   #257
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Quote:
Originally Posted by FishingRod View Post
“A minimum wage hike absolutely puts upward pressure on someone making $35-60k.”


Do you think that would be due to an increase in the cost of goods and services lowering the purchasing power of those 35-60 K people or some other reason?
And increase in costs due to the minimum wage is a myth.

It helps increase all wages because a higher minimum wage decreases demand for non-minimum wage jobs, which places pressure on employers to raise their wages in-order to attract employees to their business.
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Old 07-25-2014, 12:03 PM   #258
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Originally Posted by Loneiguana View Post
And increase in costs due to the minimum wage is a myth.
If you are trying to say a change in the minimum wage has a small impact on the overall cost of goods and services there are many different things to consider but I can see where you can at least try and make that argument.

What you appear to be saying above that increasing the minimum wage does not increase costs is false, unless you add another factor to lower costs or raise the price of said goods/services.
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Old 07-25-2014, 02:01 PM   #259
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Let's say I sell gum for 50 cents/pack and make a profit of 15 cents. Now let's say my overhead goes up so that I'm only making 12 cents/pack. What are my options?
  1. I could raise my price to 53 cents/pack. But if my competitors don't follow suit I could end up making even less money - because I sell so many fewer packs of gum. I will need to determine the price-sensitivity of the market first and ultimately make the pricing decision that's going to bring me in the most money. I can't just blindly pass along costs to my consumers - who are not captive and have a choice whether to buy my gum or not. Even if my competitors follow suit, maybe people just buy less gum and we all lose money. Furthermore - if I could make more money selling gum for 53 cents per pack, why wasn't I already doing so? Why did it take an increase in my employee costs to make me realize I could sell my gum for more money?

  2. I could look into ways of reducing overhead, such as reducing workforce, streamlining operations, automation, etc. But again - if these things would help me make more money - why wasn't I already doing them? Why did it take an increase in labor costs? Yes - automation is an exception. It is possible that an increase in min. wage will push more companies to automate or offshore. But there aren't too many min. wage jobs that are ripe for offshoring. Hard to use a fry cook from Bangalore. And automation is one of those things that will eventually happen to any job it can - because technology always gets cheaper and wins out.

  3. Or there's a 3rd option. Let's say after doing my research I decide that any increase in prices would drop my sales too much. I also decide that if I decrease my workforce those who remain will be over-worked and less productive to the point it will hurt my business. I could elect just to live with the 3 cents less profit per pack. Maybe I try to expand my business into another more profitable area. I take consolation in the fact that my profit growth rates have been at record highs for decades now and I can certainly still get by despite the slight rise in overhead. Ha ha who am I kidding? I squeal like a stuck pig and do everything I can to get my cronies in DC to keep my profits at record levels. I go to the media and threaten to end my business if this happens. I terrify my employees that their jobs are all on the line. But ultimately if the increase goes through I make the business decision which will bring me in the most profits possible.
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Old 07-27-2014, 09:55 PM   #260
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