Minimum Wage

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Saw a discussion about it on TV a while ago, and thought I would ask -

Is there any actual historical evidence that raising the minimum wage leads to a loss in low-income jobs? I haven't been able to find that anywhere.

IIRC, Florida raised the minimum wage a few years back and you heard screams of how it would ruin the economy, which all turned out to be untrue.

Here's an article on it, in fact:

http://nitpicker.blogspot.com/2006/06/www.risep-fiu.org/reports/%20Florida_Minimum_Wage_Report.pdf

Quote:

The Florida Retail Federation claimed that "Jobs will be lost - devastating our strong economy." Rick McAllister of the Retail Federation claimed a state minimum wage "could have a billion-dollar inflationary effect on the state of Florida." The Orlando Chamber of Commerce predicted that the new minimum wage would lead to outsourcing, "many good Florida jobs will be shipped over seas", and even cautioned that more "lawsuits will result. The amendment will create new opportunities for trial lawyers to make money by suing businesses."

Some public officials actively opposed the measure. Senator Mel Martinez claimed the law would cause job loss, and Governor Jeb Bush also opposed it. Darrell Kelley, president of Enterprise Florida, claimed the raise could result in a decline in health benefits coverage. Finally, national opponents chimed in. Grover Norquist claimed that "Florida cannot afford the economic pain of job losses compounded with the inevitable increases in the costs of essential goods and services."

[snip]One year after the Florida state minimum wage took effect, there is no evidence to support the dire predictions levied by critics of the measure. Far from having a devastated economy, Florida continues to experience record job growth. Instead of businesses leaving the state, the number of private employers in Florida has grown substantially in the past year, and the state is a national leader in the insourcing of jobs from overseas. Far from workers losing their jobs and being worse off, more of them are working and wages across the state have risen. However, far from wages rising sharply across the pay scale, Florida continues to be a low-wage state, and many workers have a hard time supporting their families on what they earn, even with the new state minimum wage. All available data suggest that the critics of the state minimum wage were wrong about the law's effects.

Is there any data which shows real-world examples of problems with raising the minimum wage? Or is this just more 'voodoo economics?'

Cycloptichorn

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Re: Minimum Wage

Cycloptichorn wrote:

Is there any data which shows real-world examples of problems with raising the minimum wage? Or is this just more 'voodoo economics?'

I've never seen any reports that show anything more than short term (i.e. a few months at most) impact. But then raising it doesn't seem to resolve the problems proponents claim it will take care of either.

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I doubt there are any minimum wage jobs that could be outsourced.

Actually, the company I work for usually puts on one or two high school students in the summer. It's totally unskilled. I have yet to see one at less than $7.00/hour, which says something about how outdated that $5.15 federal minimum is.

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I've employed literally dozens of kids for jobs that didn't really need doing. A Hostess, for instance, on a slow night isn't necessary and I wouldn't pay one to sit around and look pretty if it was much more expensive. At a "living wage"; a wise employer would frequently replace entry level people with a caliber capable of more multi-tasking. One $10 an hour dishwasher can do the job of two minimum wager's, so the weakest of the weak would find themselves terminally unemployed if that were the minimum wage. It would be too easy to simply offer the more qualified person $12.

I believe attempts at raising the minimum would have the precise opposite of its intended effect on those least qualified for employment.

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My feeling is that it's a wash in the end and neither causes the economy to fall apart nor raises the standard of living of those at the bottom of the pay scale.

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OCCOM BILL wrote:

I've employed literally dozens of kids for jobs that didn't really need doing. A Hostess, for instance, on a slow night isn't necessary and I wouldn't pay one to sit around and look pretty if it was much more expensive. At a "living wage"; a wise employer would frequently replace entry level people with a caliber capable of more multi-tasking. One $10 an hour dishwasher can do the job of two minimum wager's, so the weakest of the weak would find themselves terminally unemployed if that were the minimum wage. It would be too easy to simply offer the more qualified person $12.

I believe attempts at raising the minimum would have the precise opposite of its intended effect on those least qualified for employment.

Yeah, but is there any actual evidence that this has been the case?

It isn't as if the minimum wage hasn't gone up before. Did we see effects showing that it was harder to get a job for certain folk, or that jobs had to be cut because of the increase?

Lacking any evidence showing that this is true, I feel rather confident in my belief that it is not true.

Cycloptichorn

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I don't think it makes any difference as far as jobs go, loss or increase. 22 states have raised the minimum wage since the feds have. I have a problem with telling private businesses how much the have to pay their employees.
An off topic, but related to wages question, please.
How do restaurants get by with paying their wait staff less than $3 an hour? Tips aren't a guaranteed income.

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Though empirical, my experience is evidence. Employers tend to think with their checkbooks. How many of us have employed incompetent's at one time or another because it seemed like the right thing to do? Do you really think that number wouldn't decrease if it was more expensive to do so? Hell, I employed one girl for well over a year, simply because she made me laugh at her silliness every single day. I don't think it would hurt the economy that much, but it would certainly have an adverse impact on the least employable among us.

LSM wrote:

How do restaurants get by with paying their wait staff less than $3 an hour? Tips aren't a guaranteed income.

Legally, a restaurant has to pay the difference if wage ($2.33 p/hr) and tips combined totals less than minimum wage. I'd wager this is very rarely the case.

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It's at-will employment, right? If a waitress takes a job for 2.13 an hour and doesn't make enough in tips to bring that up to minimum wage, she'll quickly take a minimum wage job elsewhere. People take those jobs because they know they if they are any good they can make at least 20% of their sales per day and report only half of that, thereby keeping more in their pockets.

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OCCOM BILL wrote:

Though empirical, my experience is evidence. Employers tend to think with their checkbooks. How many of us have employed incompetent's at one time or another because it seemed like the right thing to do? Do you really think that number wouldn't decrease if it was more expensive to do so? Hell, I employed one girl for well over a year, simply because she made me laugh at her silliness every single day. I don't think it would hurt the economy that much, but it would certainly have an adverse impact on the least employable among us.

LSM wrote:
How do restaurants get by with paying their wait staff less than $3 an hour? Tips aren't a guaranteed income.
Legally, a restaurant has to pay the difference if wage ($2.33 p/hr) and tips combined totals less than minimum wage. I'd wager this is very rarely the case.

On a daily rate or weekly? How do they figure?

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Quick point about O'Bill's take -- these things tend to have a greater effect on the bottom line and decision making of small businesses who are usually operating 1) at a smaller profit margin and 2) without any real economies of scale that would help them spread the increase in cost.

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LoneStarMadam wrote:

On a daily rate or weekly? How do they figure?

Legally, by the week. Restaurant software is generally configured to total these things automatically.

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OCCOM BILL wrote:

LoneStarMadam wrote:
On a daily rate or weekly? How do they figure?
Legally, by the week. Restaurant software is generally configured to total these things automatically.

Thanks.

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No problem. Your question does bring up another problem with the minimum wage increase, however. I'd wager half the wait-staff positions out there don't exceed the current minimum by much, so a dramatic increase, if enforced, could have a devastating effect on the cheaper cafe's and diners.

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OCCOM BILL wrote:

No problem. Your question does bring up another problem with the minimum wage increase, however. I'd wager half the wait-staff positions out there don't exceed the current minimum by much, so a dramatic increase, if enforced, could have a devastating effect on the cheaper cafe's and diners.

Our grandsons girlfriend is a waitress at a restaurant on the San Antonio River Walk, during conventions or tourist season she does very well but there are some dry spells where she makes barely enough tips to pay for gas & parking & I've never known of the restaurant making up the difference, I'll have to ask her about that.

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To my understanding, those who's wages are increased by a boost in minimum wage realize little, if anything, beyond transitory, relatively near-term benefit. A consequence to increasing cost of production is commensurate compensating increase in cost of goods and services. Any real purchasing power advantage conferred to minimum wage earners fairly quickly erodes as the overall economy adjusts to increased production cost. Pretty simple concept, really; raise the floor and everything else in the room goes up right along with it. The first, and the most severely impacted, victims of inflation are those comprising the lower tiers of wage earners.

As things are now, given that this economy has weathered and been undeterred by the effects of 9/11, 2 simultaneous troops-on-the-ground shooting wars, and skyrocketing energy prices among other inconveniences, I think it unlikely the minimum wage increase might by itself have significant negative impact on the overall US economy and its current historically robust growth, however in conjunction with the increase of minimum wage other factors not at present functionally, fundamentally at play could trigger relatively rapid inflation. Among the very possible consequences of that well could be, absent immediate, offsetting tax reductions, an actual decrease in the real purchasing power of those at the bottom of the pile.

Quite adequately demonstrated is that neither wage controls nor price controls tend to achieve their intended benefits; the contrary most often proves to be the case. Right off hand, I'm hard pressed to think of any example in commerce or industry wherein increased direct governmental control and/or regulation has fostered increased growth and prosperity for the subject business entity. As Thoreau paraphrased Emmerson, "That government is best which governs least."

Well, except for government itself, of course; after all, the prime function of any beaureaucracy is to see to its own perpetuation and wellbeing, and none can doubt that our government is other than a prime beaureaucracy. One thing which safely may be anticipated, at least in the near term, is that political benefit will accrue to those proximately responsible for this increase in minimum wage.

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Sad, but true, Timber...

Somebody wrote:

"A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship."

"The average age of the worlds greatest civilizations from the beginning of history, has been about 200 years. During those 200 years, these nations always progressed through the following sequence:

From Bondage to spiritual faith;
From spiritual faith to great courage;
From courage to liberty;
From liberty to abundance;
From abundance to complacency;
From complacency to apathy;
From apathy to dependence;
From dependence back into bondage."

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Whats this I hear about Pelosi excluding the minimum wage legislation for certain businesses in her district?

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It's the Marianas islands, which is home to a couple of Starkist Tuna factories, which are based in San Francisco, so Pelosi obviously moved to protect her home companies. Not that they've ever donated money to her or anything, but hey, they live in the same town so there's just gotta be a connection.

Cycloptichorn

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MINIMUM WAGE DOUBLE STANDARD

As part of their first 100 hours plan, Democrats are pushing a hike in the minimum wage. It's going to happen, with several Republicans and even President Bush prepared to go along with it. But did you know that American Samoa...a Democrat stronghold...is being exempted from the minimum wage increase?

And just what are the reasons being given for this? According to the chairman of the House, Education and Labor Committee, Democrat George Miller of California, the economy of American Samoa doesn't have the ability to handle the United States' minimum wage and should be exempt. Nice try...want to know the real reason? The answer is the tuna industry and like the product itself, this one stinks to high heaven.

The average wage for tuna workers in American Samoa is $3.60 an hour. One of the biggest employers there is Starkist Tuna...which is headquartered in San Francisco...Nancy Pelosi land. Anybody care to take a closer look at the campaign contributions of Democrats in the last election? One thing is for sure, the delegate from American Samoa, a Democrat, is loaded down with campaign cash from the tuna industry.

So there you have it...a double standard. On the one hand, we're told you can't raise a family on $5.15 an hour and the minimum wage must be raised to $7.25 an hour. But for the right price in campaign contributions, the tuna industry in American Samoa can avoid the minimum wage altogether...they just have to stuff the pockets of the right Democrats. Where is the media on this one?

Will the press be taking a closer look at Nancy Pelosi's campaign finance disclosures? Probably not. But somebody will.

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Minimum Wage

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