Comments on: The minimum-wage stimulus http://blogs.reuters.com/felix-salmon/2013/06/20/the-minimum-wage-stimulus/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: SocraticGadfly http://blogs.reuters.com/felix-salmon/2013/06/20/the-minimum-wage-stimulus/comment-page-1/#comment-49928 Tue, 20 May 2014 22:12:30 +0000 http://blogs.reuters.com/felix-salmon/?p=22127#comment-49928 The problem is that Felix, like a lot of people, are ivory tower folks on this. A $15 min MIGHT work in the Northeast and West Coast, but would cause catastrophic destruction in the rural Midwest and South. And, I wish anybody else who “expertly” comments on this issue would not do so until having lived in said areas themselves. (I’m assuming Felix hasn’t.)

This lack of informedness then carries elsewhere. I’ve had an Australian comment on my blog who simply doesn’t understand why this won’t work.

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By: TruckerMark http://blogs.reuters.com/felix-salmon/2013/06/20/the-minimum-wage-stimulus/comment-page-1/#comment-47778 Mon, 05 Aug 2013 18:47:39 +0000 http://blogs.reuters.com/felix-salmon/?p=22127#comment-47778 This poster sounds a whole lot like one of several people that I argue against just about every day on the MSNBC Newsvine Blog. Either this poster is Roy Wilson, Pro Business, or one of the other regular Republican shills there!

[quote]It impacts a huge swath of the workforce – per the BLS, the median hourly U.S. wage is $16.71 per hour. The 25th percentile is $10.81 per hour. So what we’ll see is a massive cost increase for labor that constitutes something on the order of 25% to 35%. The increase is significant enough that employers will try to pass on higher labor costs and, if unable to do so, try to find ways to reduce labor hours. For businesses that use large amounts of low-wage labor – large swaths of the restaurant industry, for example – the increased labor costs are enough that their businesses are unprofitable overnight unless they raise prices or reduce labor[end quote].

Isn’t that interesting! The median hourly wage is now 20% BELOW 1968 MINIMUM WAGE BUYING POWER against the average cost of food, fuel, rent and the average combined cost of owning a car or riding public transit!!! And you want to try to defend such a proposition???

Moreover, WHY should American taxpayers be forced to subsidize marginal businesses that pay the current minimum wage to the tune of half what those businesses currently pay in wages, in extra social service costs?

[quote]Some combination of 3 things will happen.

Unemployment will increase because there will be a class of low-skill, low-wage workers who are basically unemployable because the minimum wage has priced them out of the labor market. (Multiple mechanisms for this to happen – some will be process improvements or capital investments that remove labor, some will just be that people no longer purchase certain services.)

Against the cost of the average basket of goods and services that includes food, fuel, utility costs, health insurance, rent, and the average cost of transportation, minimum wage buying power is DOWN BY OVER 65% SINCE 1968 when the minimum wage was $1.60 per hour.

Massive inflation will inflate away the impact of the minimum wage increase, so in real terms $15 per hour drops back to something like $8 or $10 per hour in current dollars and thus there’s no increase in living standards for those at or near the minimum wage[end quote]

Roy, since the total wage cost for the average business is about 25%, then a 40% jump in wage costs will only force prices up by 10%, plus the additional half of Social Security and Medicare, which comes to another 7.65% of wages, for a total of 17.65%. If we were to double the minimum wage to $14.50/hour, doing so would result in a 32.65% rise in prices, which would still leave the minimum wage worker with a net pay increase of 67.35%, and a rate of $14.50 per hour would still be 25% BELOW the 1968 minimum wage in terms of buying power.

There will also be an increased sales tax to pay at the retail level, which will cost a minimum wage worker an extra 32.65% against whatever their local sales tax rate is. For example, a sales tax rate of 6% would yield an extra hit to income of 1.96% too. 67.35 – 1.96 = 65.39%, which would still be a healthy increase in minimum wage spending power.

[quote]The third alternative, if that inflation doesn’t happen, is that off the books work will increase to the level of southern Europe and Latin America as employers and employees conspire to pay for work below the minimum wage[end quote]

And if they get caught, they GO TO JAIL.

[quote]*I am well aware of the debate among labor economists about whether increased minimum wages do or do not reduce employment. These studies, however, have focused on changes that are relatively modest in terms of the number of workers impacted and where the minimum wage is set compared to the median wage. $15 per hour is 90% of the US median hourly wage, and a massive increase from the current federal minimum wage of $7.25 per hour. Some states are higher, but the highest state is $9.19 (Washington state). There are a handful of cities higher than that, with the highest being San Francisco at $10.55[end quote]

*In Colorado, where I have lived for the last 22 years, our minimum wage is currently $8.03, and that fact doesn’t seem to be destroying minimum wage businesses either.

Frankly, if we were to double our minimum wage we would also have to raise other bottom 80% or 90% wages too, most likely by some declining percentage below double too, which would also increase prices by less than the rate of inflation caused by a minimum wage increase too.

If we were to double our minimum wage I would personally like to see a couple of other legal changes in the offshoring of capital and both income and capital gains taxation too.

#1: We must return both income taxes and capital gains taxes to their respective 1960s-1970s rates, as doing so will force wealthy Americans, wealthy investors, and profitable corporations to reinvest the income and profit in profit-generating business and equipment at home, rather than sending such income and profit offshore, which low tax rates encourage. Doing this would also greatly increase charitable giving too.

#2: We must also enact a stiff penalty for attempting to offshore more than a certain amount of capital too. I personally don’t care if you want to buy a beach house in Aruba or even a designer yacht from Italy, within certain cost boundaries, nothing terribly limiting at all. So how about we enact a 15% tax on offshoring more than $1 million, a 25% tax on any amount offshored that exceeds $10 million, and a 50% tax on any amount of capital offshored that exceeds $25 million too?

#3: While doubling our minimum wage will also greatly increase contributions to fund Social Security and Medicare, my own feeling is that it is way past time to increase the taxable income ceiling subject to FICA taxation to $1 million instead of $113K where it is today. I also think that capital gains largess should also contribute some small percentage of their windfall too. So how about we tack-on a 2% extra FICA tax on capital gains of over $1 million and a 3% extra FICA tax on capital gains of over $10 million, for a total of an extra 5% against windfall profits, just to ensure that such people do not escape contributing their fair share to fund these critical retirement and disability programs that benefit all Americans.

So Roy, there are two sides to every story, and I strongly felt that it was my civic duty to poke a few more gigantic holes in your Republican shill argument again. Moreover, if every wealthy American flees before such laws are enacted there will still be several more wanna-be wealthy Americans waiting in the wings for their chance to work really hard to accomplish their dreams too, so another of your shill talking points is full of holes too.

Perhaps what has been wrong with America over the past 40 years is that wealth addiction has increasingly destroyed the ability of the average Americans family to survive economically? If so, wouldn’t the vast majority of us be better-off without our wealth addict crowd?

What is worse for America, a dope addict who might steal your purse or burglarize your house to feed his addiction, or a wealth addict who might destroy the local economy of dozens of cities and towns, as well as grossly misuse taxpayer-provided bailout funds, to buyout and move an entire industry offshore, just to marginally increase the value of his stock holdings, without a care in the world as to the additional human misery that his addiction causes?

And Mitt Romney also tried to launder his 9-figure profit on offshoring Delphi through his wife’s and kid’s offshore trusts, and you view him as some kind of hero for doing so???

If a kid that sticks-up a liquor store for $100 can get 10 years in the joint, what penalty would you feel appropriate for some wealth addict who destroys over 100,000 jobs in America and not only earns 9 figures doing it, but also rapes the US taxpayer for a huge bailout too, and then attempts to circumvent our tax laws by attempting to illegally offshore his profit too?

I personally feel that America would be far better off without people like this endlessly trying to destroy our standard of living for their own personal gain.

Old Timer – 88224 (MSNBC Newsvine)

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By: TFF http://blogs.reuters.com/felix-salmon/2013/06/20/the-minimum-wage-stimulus/comment-page-1/#comment-47476 Wed, 26 Jun 2013 14:38:53 +0000 http://blogs.reuters.com/felix-salmon/?p=22127#comment-47476 McDonalds also does 5x the business per shop that Subway manages. There are many food service models — you can run a large cafeteria on a dozen staff. McDonalds is not necessarily the most efficient in terms of labor-hours, however it operates almost exclusively on very-low-skill labor. Working in Subway requires more customer interaction and greater care with the food than working in McDonalds.

From a societal standpoint, I would prefer to encourage a model in which employers invest in their employees rather than dumbing down the job until it can be completed by trained rats.

And Fulicasenia puts it well. The world wouldn’t end if the minimum wage were $15/hr. Yes, it would be inflationary (but those earning the minimum wage would still come out ahead). Yes, it would reduce corporate profits (but they aren’t about to leave). It would be a redistribution and rebalancing of the wealth in our society — which 90% of the people in the country would see as a good thing.

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By: sacramentodan http://blogs.reuters.com/felix-salmon/2013/06/20/the-minimum-wage-stimulus/comment-page-1/#comment-47463 Tue, 25 Jun 2013 14:21:50 +0000 http://blogs.reuters.com/felix-salmon/?p=22127#comment-47463 “You can’t run a McDonalds on a staff of three”

But you can run a Subway with a staff of one. One thing I noticed as I drove across the country, relocating from Maryland to California, is how many small out of the way towns, that did not have any fast food outlets, had a Subway. I attibute this to the fact that if you don’t have to clean stoves and deep fat fryers, and all you are doing is making a sandwich, it is very easy to have only one employee.

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By: Fulicasenia http://blogs.reuters.com/felix-salmon/2013/06/20/the-minimum-wage-stimulus/comment-page-1/#comment-47461 Tue, 25 Jun 2013 10:13:27 +0000 http://blogs.reuters.com/felix-salmon/?p=22127#comment-47461 Comments like “Many people really have a hard time generating $15 dollars of surplus value an hour” abound here. They ignore the fact that there is no intrinsic absolute value to labor. Those $8/hr “plebs” are unemployable at $10 or $15/hr only in an economic system where the 1% have to suck up as large a share of the income and wealth as they do in the US nowadays. That share is a decision, not a law of nature. A $15 minimum wage is meant to change that decision, and the people arguing against it dare not speak their actual opinion: that they like the current distribution just fine so please don’t change it. 90% of us would be very happy to see a more even distribution of wealth and income in the US, and a $15 minimum wage is a great way of moving in that direction.
Rich people love money so much that they will never tire of figuring out clever ways to make some, even if it’s under a system where they have to pay people $15/hr, and have to settle for less than way too much. If McDonald’s becomes an impossible business model, the entrepreneurs and capitalists involved won’t sulk off to the beach to collect driftwood; they will find other places to lead, create, and invest. You can make the argument that they will go to other countries to do so, just as at present the US is a magnet for enterprising, ambitious, and already rich people from around the world. But what rich people don’t seem to understand any more, is that after the society reaches a certain level of inequality and social immobility, we non-rich people hear that argument and think “meh– don’t let the door hit you on your way out.”

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By: JamesTorres http://blogs.reuters.com/felix-salmon/2013/06/20/the-minimum-wage-stimulus/comment-page-1/#comment-47455 Mon, 24 Jun 2013 13:53:42 +0000 http://blogs.reuters.com/felix-salmon/?p=22127#comment-47455 Raising the basic salary sound good, but it will be catastrophically in long term. It will raise the inflation, and the overall prices of all goods.

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By: smg45acp http://blogs.reuters.com/felix-salmon/2013/06/20/the-minimum-wage-stimulus/comment-page-1/#comment-47451 Sun, 23 Jun 2013 19:00:21 +0000 http://blogs.reuters.com/felix-salmon/?p=22127#comment-47451 In some larger cities black unemployment rates of the 16 to 25 year olds is 75% !!
If these people can’t find work under the current system how is raising the minimum wage going to help them?
It won’t. Even fewer employers will be able to hire people.
There shouldn’t even be a minimum wage law, period.
The government has no more business setting the price of doughnuts than it has setting the price of a person’s labor.
Every single time the minimum wage goes up, more people lose their jobs.

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By: TFF http://blogs.reuters.com/felix-salmon/2013/06/20/the-minimum-wage-stimulus/comment-page-1/#comment-47449 Sat, 22 Jun 2013 17:41:46 +0000 http://blogs.reuters.com/felix-salmon/?p=22127#comment-47449 **“Corporations suck life out of the economy.” -I’ll just leave that red rant alone…**

Elaborating on that — when corporate profit margins are at a record high, and corporate taxes are at a record low, and corporations are not reinvesting their profits in growth, you get a deflationary economy that dies a slow death under burgeoning debt.

In the 70s the pendulum swung too far towards labor and entrenched unions, but you surely can’t avoid the conclusion that it has swung too far in the other direction.

**SO NOW IF YOU COULD JUST GO AHEAD AND TURN ON YOUR MACHINE TO TURN UNRELIABLE LOW COST WORKERS INTO MORE PRODUCTIVE WORKERS YOU’VE GOT THIS WHOLE INEQUALITY THING WHIPPED!!!**

Yes, exactly! That is what I do for a living. Haven’t found a way to automate it, though, and I don’t think you will. Like most jobs, there is no replacement for the human touch.

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By: y2kurtus http://blogs.reuters.com/felix-salmon/2013/06/20/the-minimum-wage-stimulus/comment-page-1/#comment-47448 Sat, 22 Jun 2013 02:44:22 +0000 http://blogs.reuters.com/felix-salmon/?p=22127#comment-47448 @ TFF…. as you know we agree on 90+% of virtually everything. I cede to your point that not all mcdonalds would alter their business models to that of starbux and DD (both of which have a higer return on equity and sales per square foot than MCD.)

The following sentences are goofy:
“Corporations suck life out of the economy.” -I’ll just leave that red rant alone…

“You can hire a large number of unreliable low-cost workers, or you can invest in a smaller number of productive moderate-cost workers.” -SO NOW IF YOU COULD JUST GO AHEAD AND TURN ON YOUR MACHINE TO TURN UNRELIABLE LOW COST WORKERS INTO MORE PRODUCTIVE WORKERS YOU’VE GOT THIS WHOLE INEQUALITY THING WHIPPED!!!

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By: Mar10 http://blogs.reuters.com/felix-salmon/2013/06/20/the-minimum-wage-stimulus/comment-page-1/#comment-47446 Fri, 21 Jun 2013 20:07:14 +0000 http://blogs.reuters.com/felix-salmon/?p=22127#comment-47446 This isn’t terrible satire, but it’s missing a punchline. I’m afraid people will mistake this for a serious suggestion.

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