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Is a minimum wage necessary?

 
 
realjohnboy
 
  1  
Reply Tue 11 Jul, 2006 12:46 pm
We may have beaten this aspect of the subject into the ground, Linkat. But to carry your apple stand store story a bit further...
If you increase the wages by 100% (or $200), which I believe was your example, disposable income will increase and even at the old price of $1 each you, the apple stand owner, would come out okay.
In fact, if demand increases, you may be able to plant another couple of trees and the rise in production costs may be small enough that your cost of producing each apple goes down.
The inflation issue kicks in if you can not increase production efficently. Then you have the basic Econ 101 definition of inflation being too many dollars chasing too few goods.
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cicerone imposter
 
  1  
Reply Tue 11 Jul, 2006 02:03 pm
rjb, It's the case today that we have more dollars chasing limited goods and services, because of the high consumer and federal debt. We are borrowing money today to be paid later, but we all know with so much debt floating in our economy, it's effect can only be translated as more future inflation.
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Linkat
 
  1  
Reply Tue 11 Jul, 2006 02:06 pm
Ditto Thomas - My basic premise is that minimum wage (in most cases) will not have an impact - other than the possibility of people being laid off. I simply cannot write as eloquently as Thomas.

Yes, price is affected by increased costs, indirectly. It has an affect on supply. If costs go up there is a shift of the supply curve resulting in higher prices.

I suggested the basic economics in it seemed some people didn't understand the basic cost/supply relationship - and many people in their thoughtful wish to help others less fortunate only correlate higher salary = more spending power without looking at the downstream impacts (or lack thereof). If it sounded like an insult or talking down to anyone I apologize it was meant more as if you haven't a background in the subject how could you realize all the impacts. Similar to I would never understand ramifications to certain medical procedures.

Realjohnboy - disposable income will increase for those individuals receiving the increase in salary, but for those that get laid off it won't - so net someone gets $0 and some one else receives double. That nets the same. Sam gets an increase to $200, Fred gets $0 being laid off so disposable income prior to rise in minimum wage is $200 and after $200.
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Linkat
 
  1  
Reply Tue 11 Jul, 2006 02:10 pm
From one of my favorite dictionaries:


Causes of Inflation
Economists wake up in the morning hoping for a chance to debate the causes of inflation. There is no one cause that's universally agreed upon, but at least two theories are generally accepted:

Demand-Pull Inflation - This theory can be summarized as "too much money chasing too few goods". In other words, if demand is growing faster than supply, prices will increase. This usually occurs in growing economies.

Cost-Push Inflation - When companies' costs go up, they need to increase prices to maintain their profit margins. Increased costs can include things such as wages, taxes, or increased costs of imports.


http://www.investopedia.com/university/inflation/inflation1.asp
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cicerone imposter
 
  1  
Reply Tue 11 Jul, 2006 02:30 pm
Linkat, Individual companies don't have total control on increasing prices, because of competition. Yes, there are many variables that affect prices, and trying to explain it through one company is not realistic.
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Linkat
 
  1  
Reply Tue 11 Jul, 2006 02:53 pm
Of course individuals companies do not - I was using this as an example to simply things - just increase this to include the apple industry as a whole as the minimum wage would affect all those businesses.
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realjohnboy
 
  1  
Reply Tue 11 Jul, 2006 03:32 pm
Just a head's up. The teaser on National Public Radio mentioning that tomorrow (Wed) during Morning Edition there will be a story on The Minimum Wage. That is all I know.
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squinney
 
  1  
Reply Tue 11 Jul, 2006 05:37 pm
I heard that, too. Also mentioned that the Bush administration is not in favor of raising minimum wage.

Meanwhile... I don't guess $16,000 annual raises harm the economy.
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2PacksAday
 
  1  
Reply Tue 11 Jul, 2006 06:57 pm
Without looking it up...would anyone care to guess at how many jobs out there actually pay minimum wage.
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cicerone imposter
 
  1  
Reply Tue 11 Jul, 2006 07:09 pm
I had to look it up:

According to numerous sources, approximately 30 million workers between the ages of 18 and 64 earn less than $9 an hour in their jobs -- a full-time annual income of $18,800, assuming a full-time (40 hour week), 52-week work schedule -- the income that marks the federal poverty line for a family of four. These are folks making somewhere around the minimum wage ($5.15 an hour for nontipped workers, and $2.13 an hour for tipped workers).
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squinney
 
  1  
Reply Tue 11 Jul, 2006 07:11 pm
Am I confusing my numbers, or is that about ten percent of the population?
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cicerone imposter
 
  1  
Reply Tue 11 Jul, 2006 07:19 pm
That's about ten percent of the US population, but much greater when looking at 'working age' people - say people age 18 or over. Some seniors also work beyond "retirement" age.
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Chai
 
  1  
Reply Tue 11 Jul, 2006 07:27 pm
Linkat....sorry to be appearing a little dense here, I understand the law of supply and demand, but I must be missing one of your points.

Back on page 9 I posted the example of McDonalds (can be anyplace) giving 45 employees at a store a .50 hr raise....that's less than $180 a day increase in payroll (taking SS out of the employer equation for simplicity). An average Mcdonalds serves over 1500 people a day. You'd be spreading that $180 over 1500 people.

In my eyes I'm seeing 45 people making an extra $20 a week, and a customer coming in once a week spending about a dime and a nickel extra.

People working for minimum wage are producing a large number of product or service. The extra cost is diluted by the large numbers of those paying for each unit.

Many of the products minimum wage workers produce are items they wouldn't even able to afford if they made a couple dollars an hour more. So the cost going up for those items wouldn't even effect them.

If I'm producing blouses that cost $50 each, I'm not going to be able to afford them whether I make $5.50 hr or $7.50. However, the person who can an does purchase such items would still pay the additional dollar or two it costs.

Also, I noted in my other post that these people are interchangable cogs. Just because they could theoretically get a job paying a few pennies more elsewhere, quite often there's other stuff involved that just doesn't fit into a neat equation, preventing them from making the move.

Maybe a person works the night shift, husband works days, so the kids are always cared for....the higher paying job across the street tells you that they can't start you on the night, but will give you that shift when it comes up....but it never does, or it doesn't for 2 weeks. Now, you had all that extra child care money going out. Then, on top of it, you're worry about how you're going to come up with the money, you're not paying attention to work....and you get fired.

Sometimes our big brains and plans get in the way of reality.

Anyway, can you make that supply and demand thing a little clearer, based on what I'm saying?

Great thread though Linkat, most interesting I've read recently. Thanks.
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Ragman
 
  1  
Reply Tue 11 Jul, 2006 07:49 pm
number of working population
30 Million people may be 10% of the TOTAL population (we're almost there at 300m), but it is NOT the number of working population. That is the number we need.
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2PacksAday
 
  1  
Reply Tue 11 Jul, 2006 07:54 pm
From U.S. Dept of Labor

How large is the labor force?

The labor force, then, is not a fixed number of people. It increases with the long-term growth of the population, it responds to economic forces and social trends, and its size changes with the seasons. On average in 2000, there were roughly 135 million employed and 6 million unemployed making up a labor force of 141 million persons. There were about 69 million persons not in the labor force.

---

And this from another site

"That said, there are not too many minimum wage jobs in our economy. Depending on whose figures you use, somewhere between about 1/2 of one percent, and three percent of all jobs held by adults pay minimum wage. Minimum-wage jobs are unevenly distributed with rural areas seeing higher percentages of minimum-wage workers in the workforce than urban areas. On a practical level, most potential workers would rather cobble together a mix of sporadic part-time work, assistance program benefits, and unreported income derived from the shadow economy, than take a full-time minimum wage job. But it's critical to note that minimum wage sets the floor above which all the other jobs set compensation levels to compete for workers. When the minimum wage goes up, it exerts upward pressure on the next few levels up, where a great many Americans are employed."
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cicerone imposter
 
  1  
Reply Tue 11 Jul, 2006 08:01 pm
Age structure of the US:


0-14 years: 20.4% (male 31,095,847/female 29,715,872)
15-64 years: 67.2% (male 100,022,845/female 100,413,484) 65 years and over: 12.5% (male 15,542,288/female 21,653,879) (2006 est.)

It's about 200.5 million or 2/3ds of the US population who represents "working age," but we're not sure how many of those are a) stay at home spouse, b) disabled, or c) students.
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Ragman
 
  1  
Reply Tue 11 Jul, 2006 08:14 pm
Census and Labor Statistics
From listing on US Census Bureau fact page:

http://factfinder.census.gov/servlet/SAFFFacts?_submenuId=factsheet_0&_sse=on

As of 2000, individuals below poverty level number 33,899,812 consisting of 12.4% of the Labor force

I mention this here because THESE are the people who are most affected by the minimum wage law. These people are the ones whose lives are greatly affected by the fat, rich politicians who see nothing wrong with increasing their OWN salaries at the drop of a hat and under the cover of darkness.
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cicerone imposter
 
  1  
Reply Tue 11 Jul, 2006 08:35 pm
How congress voted to help the middle class:

Who needs a middle class anyway?
May 21, 2004 1:22 PM PST
Middle-Class 2003: How Congress Voted (executive summary) Who is doing better under the a Republican White House and Congress? If you're part of the vast majority...the middle class...it isn't you.

So finds a very useful new report out today from the Drum Major Institute for Public Policy, a non-partisan think tank. Full report here. (PDF) The study defines middle class as Americans with incomes between approximately 200 percent of the federal poverty threshold and those of the top 5 percent of earners -- roughly $25,000 to $100,000 a year. (Which excludes Congresscritters, who have consistently given themselves raises to well over 150k a year.)
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cicerone imposter
 
  1  
Reply Tue 11 Jul, 2006 08:53 pm
Here's an interesting LINK where you can find out your own city's stats. Give it a try, and tell us what you found that you were unaware of before looking at the stats of your city.
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Thomas
 
  1  
Reply Wed 12 Jul, 2006 12:59 am
cicerone imposter wrote:
I had to look it up:

According to numerous sources, approximately 30 million workers between the ages of 18 and 64 earn less than $9 an hour in their jobs -- a full-time annual income of $18,800, assuming a full-time (40 hour week), 52-week work schedule -- the income that marks the federal poverty line for a family of four. These are folks making somewhere around the minimum wage ($5.15 an hour for nontipped workers, and $2.13 an hour for tipped workers).

Sorry, CI, but I don't understand how you get from "less than $9 an hour" to "around the minimum wage". " Between 1 and 1.75 times X" isn't the same as "around X".

I think I read the actual figure on Brad deLong's blog -- but can't seem to find there at the moment. As I remember it, about 2% of American jobs pay the minimum wage today. This figure would increase to 4% if Ted Kennedy got his way and the minimum wage increased to $7.25 per hour. For comparison, the article said that 10% of all jobs paid minimum wage in 1968, when it was the highest in real terms. (About $8/hour in today's dollars.)
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