Minimum Wage

Regarding the republican attack on Nancy Pelosi and the minimum wage bill.....there's a lot more to it than meets the eye:

http://scoop.epluribusmedia.org/story/2007/1/12/20043/8550

Understanding the GOP Sh*tstorm Over American Samoa

<snip>

"First of all, it's important to note that the substance of the Republican argument, that the minimum wage bill specifically exempts American Samoa from federal minimum wage laws, is factually incorrect. American Samoa has ALREADY been exempt from those laws for some time, including for 12 years under a Republican majority. Currently wage floors in American Samoa are set by the US Department of Labor."

<snip>

"Unlike the CNMI, which was abusing labor practices, American Samoa is subject to most all of the labor standards of the United States with the exception of the minimum wage. Because of the revelations of abuse, Democrats sought to remove the CNMI's exemption: it could fairly be seen as punishment. So, the bill did not specifically exempt American Samoa from the US minimum wage; instead it did not lift an exemption that is current US law. This may sound semantic to the skeptical, but it most certainly is not. Refusing to lift an exemption that was instituted under another set of lawmakers is a far cry from specifically finding a particular territory to reward with a chit.

The other part of this charge is that Nancy Pelosi is somehow rewarding Del Monte, a constituent business, by leaving low wages in place in a part of the world where Starkist Tuna operates (their parent company is Del Monte). The implication is that Pelosi is corrupt for handing out a favor to a business with interests in her district. But that could only be true if Pelosi wrote the bill or made the decision to leave the exemption on American Samoa in place, and the Washington Post reports that it was not her call."
<snip>

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The complete explanation is at the above link. It really isn't as clearcut as the repubs would like you to believe.

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So a raise in minimum wage is going to A. Bring up energy and housing costs, B. Raise the price of EVERYTHING else, and I think the most idiotic suggestion of the day has to go to C. Encourage people to not get an education. Laughing

While it's certainly true produce and Big Mac's may see a quick spike, where is the rest of this foolishness coming from? Raise your hand if you think there's a lot of minimum wage jobs in the Housing Sector, let alone the Energy Sector. Laughing

Or if a dimwit is going to be more satisfied being a dimwit because he's a few bucks closer to overcoming poverty? More likely, those couple extra bucks will help pay tuition at a school where again, virtually NO minimum wage jobs exist.

To the minimum wage earner who keeps his job, an increase in minimum wage is a raise, pure and simple. It is simple minded to think the price of everything will go up at the same level and that entire line of argument is a canard. The problem is in the effect on businesses that depend on cheap labor, and consequently provide jobs for same, and especially for the least employable among us as they will find no job at all... if substandard jobs aren't available. This is adequate to give pause when considering an increase in minimum wage, but the idea that it won't positively effect the recipients of same is preposterous.

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Butrflynet wrote:

The complete explanation is at the above link. It really isn't as clearcut as the repubs would like you to believe.

Perhaps not... but "they did bad too, while they were in power" is hardly an excuse for anything. Produce a reasonable excuse to not bring Amercan Samoa into the fold, since it is the only exemption, or the charge will continue to have wheels. If Nancy wanted to shield herself from the predictable political fallout, she need only lead the charge to bring American Samoan into the fold. Has she?

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LoneStarMadam wrote:

My question really was a question. I don't know what impact minimum forced wages has on companies, I do have a problem with it simply because I don't like gov't forced anything that isn't constitutional.

According to the standard, supply-and-demand model in economics, a minimum wage works just like every other price control. There is a broad consensus among economists about the general effects of price floors, which liberal A2Kers can read about in Paul Krugman and Robin Wells: Economics, and conservative A2Kers can look up in Gregory Mankiw: Principles of Economics. In this model, raising the minimum wage has the following consequences:

Some workers get a raise, which employers pay. This is a redistribution from employers to workers, which you may or may not want, depending whose side you're on.
Some workers get laid off (or not hired in the first place). These are the ones that are profitable to employ at the market wage or the old minimum wage, but not at the new minimum wage. This is a loss for everyone affected.
As the government raises the wage above the market wage, the redistribution effect dominates at first. To a crude but acceptable approximation, it rises linearly as you raise the minimum wage further. The disemployment effect, on the other hand, is small at first but scales about quadratically.

Putting points 1-3 together, you can decide whether you consider a higher minimum wage a loss or a gain for society. It depends on your values. If you want to maximize the material welfare in society without caring about its distribution, the very existence of a minimum wage is bad, and every raise of it is a loss for society. That's because you'll be indifferent about consequence #1, consider #2 a loss, so #3 doesn't matter.

There are people with other values, though. They want to maximize the welfare of workers and are indifferent about the welfare of employers. To them, #1 is a gain, #2 is a loss and #3 tells them about the optimal tradeoff. If you set the minimum wage to $50, workers will lose more from disemployment than they gain from redistribution, which is why no Democrat is advocating it. If the market wage is $5, and you set the minimum wage to $5.10, the redistribution effect dominates and workers gain from a minimum wage. Hence, those who seek to maximize worker's welfare will raise the minimum wage up to the point where the gain to workers just outweighs the loss to worker. They won't raise it beyond that point. (I think this answers a question Mysteryman asked.)

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OCCOM BILL wrote:

Butrflynet wrote:
The complete explanation is at the above link. It really isn't as clearcut as the repubs would like you to believe.
Perhaps not... but "they did bad too, while they were in power" is hardly an excuse for anything. Produce a reasonable excuse to not bring Amercan Samoa into the fold, since it is the only exemption, or the charge will continue to have wheels. If Nancy wanted to shield herself from the predictable political fallout, she need only lead the charge to bring American Samoan into the fold. Has she?

Pelosi moves to close Samoa wage loophole
By Charles Hurt
THE WASHINGTON TIMES
January 13, 2007

House Speaker Nancy Pelosi yesterday said Democrats will close a loophole in the House-passed minimum wage increase that exempts American Samoa -- an action taken after it was revealed that one of the U.S. territory's main employers is based in her congressional district.
"I have asked the Education and Labor Committee as they go forward with the legislation to make sure that all of the territories have to comply with U.S. law on the minimum wage," Mrs. Pelosi said.
The decision follows criticism over the exemption, reported earlier this week by The Washington Times, to allow tuna canneries in American Samoa to continue paying $3.26 an hour -- nearly $4 less than the $7.25 minimum wage passed by the House Wednesday.
Republicans, after the vote, pointed out that StarKist Tuna, one of two companies that employs about 75 percent of the Samoan work force, is owned by Del Monte, which is headquartered in Mrs. Pelosi's San Francisco district.
"Simply put: It is unethical to provide a special benefit to a company in any member of Congress' hometown," said Rep. John B. Shadegg, Arizona Republican. "For Democrats to act in such a manner so early on in their tenure is hypocritical at best and criminal at worst."
Democrats involved in the legislation say that neither Del Monte nor StarKist has lobbied Mrs. Pelosi or the committee on the matter. And records show that while Del Monte political action committees have given $5,300 in the past five years to Republicans, neither they nor Del Monte executives have given to any Democrats.
The bill, which raises the federal minimum wage $2.10 from $5.15, pointedly extends for the first time the federal minimum wage to the Northern Marianas Islands, another U.S. territory in the Pacific with similarly low wages.
Democrats defended the exemption earlier in the week, saying that the Northern Marianas territory has a long history of work-force abuses that require immediate action. But they also acknowledged that the wages in both places are essentially the same and, they said, need to be raised.
One person who is concerned about enforcing the federal minimum wage in American Samoa is non-voting Rep. Eni Faleomavaega, who echoed the arguments of many conservatives against raising the minimum wage in poorer regions of the U.S. mainland.
A "decrease in production or departure of one or both of the two canneries in American Samoa could devastate the local economy, resulting in massive layoffs and insurmountable financial difficulties," he said in a statement provided to The Times.
"The truth is the global tuna industry is so competitive that it is no longer possible for the federal government to demand mainland minimum wage rates for American Samoa without causing the collapse of our economy and making us welfare wards of the federal government."
Melissa Murphy Brown, vice president for Del Monte, warned in a statement yesterday that applying the minimum wage at the tuna packing plants in American Samoa would "severely cripple the local economy."
"For over 50 years, the Federal Department of Labor has provided that wages in U.S. territories, including American Samoa, be set by a federally appointed wage board, following public hearings," she said in a background statement compiled by StarKist and Chicken of the Sea.
"The wage board takes into accounts several factors including standards of living and recognizes that wages cannot increase to a level that substantially curtails employment."
House Majority Leader Steny H. Hoyer, Maryland Democrat, said on the House floor yesterday that the decision to exempt American Samoa "was not an oversight."
"The minimum wage in America Samoa, unlike the Marianas or Guam, is set by the Department of Labor and Industry Committee so that it is determined in a different way than the others, including our states," he said.
Wages paid in American Samoa are often lower than the $3.05 minimum wage in effect in the Northern Marianas. Wages in American Samoa for manual labor range from $2.70 up to about $3.60, according to the U.S. Department of Labor.

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Butrflynet, that should do well for damage control, but the damage has been done. The excuses for not having done so sooner do have merit, but not exclusively to American Samoa... though that may be the best example of the problem with the bill in the first place. It will be interesting to see how the proponents of the bill straddle that fence.

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OCCOM BILL wrote:

So a raise in minimum wage is going to A. Bring up energy and housing costs, B. Raise the price of EVERYTHING else, and I think the most idiotic suggestion of the day has to go to C. Encourage people to not get an education. While it's certainly true produce and Big Mac's may see a quick spike, where is the rest of this foolishness coming from? Raise your hand if you think there's a lot of minimum wage jobs in the Housing Sector, let alone the Energy Sector. Or if a dimwit is going to be more satisfied being a dimwit because he's a few bucks closer to overcoming poverty? More likely, those couple extra bucks will help pay tuition at a school where again, virtually NO minimum wage jobs exist.

To the minimum wage earner who keeps his job, an increase in minimum wage is a raise, pure and simple. It is simple minded to think the price of everything will go up at the same level and that entire line of argument is a canard. The problem is in the effect on businesses that depend on cheap labor, and consequently provide jobs for same, and especially for the least employable among us as they will find no job at all... if substandard jobs aren't available. This is adequate to give pause when considering an increase in minimum wage, but the idea that it won't positively effect the recipients of same is preposterous.

I think you may have missed the sarcasm in my post (identified by the smiley). I was not suggesting that any of those things will happen. I was merely challenging those who were saying that the minimum wage is going to result in higher prices for everyone by showing that the prices have risen quite a bit even though the minimum wage stayed flat.

If anything, I would expect to see a boost in sales for some of these smaller shops. I bet you McDonalds has more minimum wage CUSTOMERs than Olive Garden. I don't think you'll see to many minimum wage earners butting their extra $2/hr into a savings account. The fact is that they will be spending this money, and spending it in shops that probably hire minimum wage earners.

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I did initially miss the sarcasm in your post, but there was enough nonsense in others' that I chose not to edit. :wink:

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Thomas wrote:

According to the standard, supply-and-demand model in economics, a minimum wage works just like every other price control. There is a broad consensus among economists about the general effects of price floors, which liberal A2Kers can read about in Paul Krugman and Robin Wells: Economics, and conservative A2Kers can look up in Gregory Mankiw: Principles of Economics.

Thomas, thanks for the points. Not being an economist, but simple common sense says labor could be considered a commodity that is exchanged in the market, just as other commodities are exchanged for dollars. Any time you set an artificial value to a commodity, it brings in unintended consequences, often to the detriment of the economy.

I previously cited Nixon's gasoline price controls. A price control on a resource, such as oil, will suppress exploration and development for new resources, which leads to a shortage, which eventually leads to even higher prices, just the opposite of the desired effect. Conversely, if you set a minimum price on a product of lesser quality, this leads to more of those products being offered, which leads to an over supply of those products, which eventually brings about even lower values for the products than before the price minimums were instituted.

OCCOM BILL claims to know alot about the effects of minimum wage. I asked the question, which he did not answer, and that is "if you force people to pay almost as much for weed seeds as they pay for wheat, what will people grow?" The obvious answer is they will grow more weeds because it is easier for them to do for the money they receive for their efforts. It is easy to conclude therefore that setting an artificial minimum wage at a level that is higher than the work is worth, there will be more people satisfied to work minimum wage jobs, which leads to an oversupply of workers for those jobs, and eventually more suppression of wages. In the long run, this is bad for the economy and even bad for the workers themselves.

Now, I admit, if the government mandated minimum wage level is not much above what those jobs would pay anyway, only minimal effects as described will occur. OCCOM BILL rightly points out many jobs pay more than minimum wage anyway. But then, one would ask why even bother setting a minimum wage? The answer is "TO MAKE DEMOCRATS FEEL LIKE THEY ARE GOOD AND DID SOMETHING." Hurray, we can all celebrate that their conscience is now clear, they did something, they can brag about it in order to get elected next time.

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okie wrote:

OCCOM BILL claims to know alot about the effects of minimum wage. I asked the question, which he did not answer, and that is "if you force people to pay almost as much for weed seeds as they pay for wheat, what will people grow?" The obvious answer is they will grow more weeds because it is easier for them to do for the money they receive for their efforts. It is easy to conclude therefore that setting an artificial minimum wage at a level that is higher than the work is worth, there will be more people satisfied to work minimum wage jobs, which leads to an oversupply of workers for those jobs, and eventually more suppression of wages. In the long run, this is bad for the economy and even bad for the workers themselves.

Do you really think there's a substantial segment of the workforce that'll think they're on easy street once their making $7.50 an hour? That translates to $16,500 for full time... which I can only assume is right about on the poverty line. Your weed example simply doesn't apply, because no one is promising to provide jobs any more than they're promising to pay for weed-seeds. Loss of jobs is a real and frankly, obvious byproduct but that is completely separate from your ridiculous supposition about job satisfaction and dimwit encouragement. Laughing

Your next paragraph is really pretty accurate...

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OCCOM BILL wrote:

okie wrote:
OCCOM BILL claims to know alot about the effects of minimum wage. I asked the question, which he did not answer, and that is "if you force people to pay almost as much for weed seeds as they pay for wheat, what will people grow?" The obvious answer is they will grow more weeds because it is easier for them to do for the money they receive for their efforts. It is easy to conclude therefore that setting an artificial minimum wage at a level that is higher than the work is worth, there will be more people satisfied to work minimum wage jobs, which leads to an oversupply of workers for those jobs, and eventually more suppression of wages. In the long run, this is bad for the economy and even bad for the workers themselves.
Do you really think there's a substantial segment of the workforce that'll think they're on easy street once their making $7.50 an hour? That translates to $16,500 for full time... which I can only assume is right about on the poverty line. Your weed example simply doesn't apply, because no one is promising to provide jobs any more than they're promising to pay for weed-seeds. Loss of jobs is a real and frankly, obvious byproduct but that is completely separate from your ridiculous supposition about job satisfaction and dimwit encouragement.

Your next paragraph is really pretty accurate...

Yes, I really think a segment of the workforce will be affected in terms of their motivation to move past a minimum wage job. I don't think it is a substantial segment in percentage, but a very small percentage of the work force is enough to affect the economy and wage scales incrementally. I personally know people that are affected. We are talking about high schoolers working minimum wage jobs. If they make $7 plus, versus maybe $5, there will be a slightly higher percentage of them that will think hey, I'm making decent money, I can go shack up or get married and have a kid or two on this if my girlfriend or spouse works the same kind of job too. After all, many of these kids are tired of school by the time they finish High School and are easily swayed into thinking they don't need to bother with more of what they don't like. Some of them are simply not smart enough to realize their parents are paying their room and board, maybe for their car, and everything else, so minimum wage is great spending money for them. They aren't forward enough looking to see what is entailed in completely supporting themselves.

I realize that only a small percentage of minimum wage earners may be affected by the minimum wage jump to $7+ and thus less motivated to advance by getting an education or learning a trade, but if only 5% or 10% of them are affected, it has a significant impact on the work force available. If minimum wage was set at $15.00 per hour, it would obviously have a larger impact, and if it was set at $30.00 per hour, it would have a monstrous impact. The impact is obviously a sliding scale effect at the margins of the cross section of the work force. The point is that if the minimum wage is an artificially set value of the work rendered, it does in fact skew the supply and demand of workers at that skill level. This should be Economics 101, an inescapable fact.

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I don't get it. First they complain because of all the legal and illegal immigrants, and say that if employers paid a decent wage, we wouldn't have such a dire need for them to work our farms and low wage jobs for which we're willing to look the other way and break laws.

Then they complain that there are too many lazy slobs on the dole sucking from the welfare tit because it is cheaper for them to not work than to work those low paying menial jobs and also pay for child care, health care and food.

Now the minimum wage might be increased by a fairly decent amount and they're complaining that too many people will settle for working at that back breaking labor, you know...the jobs the immigrants were doing because no self-respecting white boy would stoop to do such low paying menial work. And worse yet, the ones that would jump at an opportunity to get off the welfare merry-go-round might get too comfy and settle for that back breaking minimum wage paying job that might pay for more than the work is worth.

Of course, we don't want to face the danger of paying for more than the work is worth. After all, we really don't need people to clean the hospital floors or wash hospital linens, clean the toilets in the hotels we use, or the food kitchens we get our meals from.

We need to keep paying crap for crap jobs so that we can keep getting sick from the food grown by crap farmers who hire pickers who aren't provided a place to crap at their crappy employment places. Then we can keep yelling about laws being broken, and those desperate immigrants who come clean up the crap we don't think is worth the pay.

Damned Lincoln. If he'd minded his own business we'd still have slavery and not have all these problems.

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Butterfly, you don't get it, do you?

I won't bother to explain the rest of your comments that are poorly reasoned, but Lincoln was a Republican.

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Oh, I got your number a long time ago, okie.

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It ain't my reasoning, okie. That was a summation of the posts around these parts for the last few months.

For once, I agree with you. It is indeed poorly reasoned.

Of course, it's just another inane comment from someone who doesn't buy what you're selling so feel free to write it off as just another stupid post.

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So you don't care to argue the obvious economic facts? I'm beginning to get your number also.

To address your first point: It is Democrats first and foremost that want illegals in this country, mainly because they are mostly Democrat voters. If Democrats really cared about decent wages at the bottom, they would stop the practice of people hiring illegals at substandard wages, including under the radar screen of minimum wage laws, etc. Then just maybe the infrastructure we support with taxes would be able to support the citizens of the country.

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Okie, your scenario makes sense once you go beyond the poverty level. Until then; it's ridiculous. $7.50 didn't turn anyone on 20 years ago, when I was in school, and I assure you it isn't turning too many people on now. We humans are natural born capitalists and barely enough will never be satisfying. Substitute obvious economic farces for facts.

Butterflynet, I suspect the biggest problem with your scenario is your use of the word we. It is inappropriate when you're dictating to someone else how much to pay... and you're assuming they can afford to pay it. The word we does come into play when jobs start disappearing, however, because then we all get to anti up to pay for no work whatsoever.

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OCCOM BILL, $7.50 may not turn lots of people on, but obviously even less than that turns on lots of people, including millions of illegal immigrants. Just another thought here, perhaps raising the minimum wage will spur more illegal immigration. Could that be another unintended consequence?

If we really cared about the labor pool at the bottom end of the scale, we would clamp down on employers hiring illegals, and then the wage scales at the bottom may rise due to supply and demand.

Butterfly misses my entire point, that artificially setting a minimum wage may in the long run, suppress the wage scales at the bottom.

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okie wrote:

OCCOM BILL, $7.50 may not turn lots of people on, but obviously even less than that turns on lots of people, including millions of illegal immigrants. Just another thought here, perhaps raising the minimum wage will spur more illegal immigration. Could that be another unintended consequence?

Having employed LOTS of immigrants, NONE for minimum wage, I can tell you that basic sustenance tends to turn them on, but human nature takes over and they want more... just like anyone else, only, as a group... seem to more readily willing to EARN it. Your barking up the wrong tree for bigoted blather.

okie wrote:

If we really cared about the labor pool at the bottom end of the scale, we would clamp down on employers hiring illegals, and then the wage scales at the bottom may rise due to supply and demand.

There is truth here... but you discount the fact that even minor clamping down on immigrants results in oranges rotting on the tree. That's not terrific for the economy either. Lotta work moving unpicked fruit and veggies not being performed for lack of fruits and veggies.:wink:

okie wrote:

Butterfly misses my entire point, that artificially setting a minimum wage may in the long run, suppress the wage scales at the bottom.

Your end has some merit... but your means needs some more study time.

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okie wrote:

So you don't care to argue the obvious economic facts? I'm beginning to get your number also.

To address your first point: It is Democrats first and foremost that want illegals in this country, mainly because they are mostly Democrat voters.

Okie, illegals aren't allowed to vote. It's simple civics 101. To vote, you must be a citizen of the United States. If you were a citizen of the United States, you wouldn't be illegal.

If Democrats really cared about decent wages at the bottom, they would stop the practice of people hiring illegals at substandard wages, including under the radar screen of minimum wage laws, etc.Then just maybe the infrastructure we support with taxes (which infrastructure is that, the one you don't want tax dollars to pay for?) would be able to support the citizens of the country. Which is it, the illegals or the citizens?

If we really cared about stopping the flow of immigrants and our citizens in the labor pool at the bottom end of the scale, we'd insist employers pay a decent wage to attract our own citizens to the jobs so there would be no symbiotic relationship between the haves of the US and the have nots from other countries. We'd also solve the tax paid infrastructure problems related to that bottom end of the scale where humans, not numbers, reside.

When was the last time a bunch of employers walked up to their employees and said "Bob, George, Jill, Jose, Maria, the work you are doing on this job is worth a lot more than I'm paying you. I'm tired of you working for the slave wages I pay, so here's a decent raise for you."

You're more likely to hear a bunch of them crowing to the shareholders about how much profit they are making by keeping wage levels down.

Pull our own citizens up out of poverty by insisting on the paying of a decent minimum wage and there won't be such a vacancy at the factory mills and farms for the poverty stricken of other countries to fill. That will force those countries to do something about their own economic problems to help their people. You'll get a lot more voting citizens rallying behind a win-win for everyone. You'll even have so many ex-welfare folk applying for those jobs that the lazy teens you're worried about won't have an opportunity to slack off.

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