If The Minimum Wage Doesn't Benefit The Poor Then ??

[Chef Ramsay]

What's the Point of having it?

It’s not often that I agree with the New York Times on matters economic and it might be all the way back in 1987 that I last agreed with it on the subject of the minimum wage. But miracles do happen and so has one here. The NYT was once right on the subject of that minimum wage. They both argued that sure, we want to increase the incomes of the working poor. But doing so will mean that we do the insisting on improving the incomes of those working poor do the paying for the improvement. And also that the correct level of the minimum wage was then and is now zero. Yes, that’s correct, the proper rate for the minimum wage is $0 per hour.

Here is that editorial:

The Right Minimum Wage: $0.00

And here’s part of their argument:

Perhaps the mistake here is to accept the limited terms of the debate. The working poor obviously deserve a better shake. But it should not surpass our ingenuity or generosity to help some of them without hurting others. Here are two means toward that end: Wage supplements. Government might subsidize low wages with cash or payments for medical insurance, pensions or Social Security taxes. Alternatively, Washington could enlarge the existing earned income tax credit, a ”negative” income tax paying up to $800 a year to working poor families. This would permit better targeting, since minimum-wage workers in affluent families would not be eligible.

All entirely true. And we’ve had various papers just recently that back up this point. Here, for example, showing that minimum wage rises don’t in fact help the poor. The major consumers of the output of minimum wage workers are the poor themselves. Yet the majority of recipients of the minimum wage are not in fact those in poor households. Thus the poor themselves carry the burden of price rises that result from the minimum wage rise while they do not gain all of the income benefits from that rise. So, the poor in aggregate lose out.

And we’ve also got the fact that rises in the minimum wage really do destroy jobs. The last 30% rise in the minimum wage destroyed 0.7% of all jobs in the country.

Then today we’ve something very interesting from Don Boudreaux. He’ll forgive me quoting at length, for what he’s giving us is the theoretical points that must hold for it to be true that poor workers actually do benefit from a minimum wage rise:

(1) employers of low-skilled workers really do generally possess monopsony power, and

(2) that the super-competitive earnings by employers made possible by this monopsony power are not competed away on the output side of the market, and

(3) that the nature of the jobs performed by minimum-wage workers do not change significantly for the worse in response to minimum-wage legislation (for example, that employers of such workers do not respond to minimum-wage legislation by providing for their minimum-wage workers fewer on-the-job amenities), and

(4) that the existing conditions of employment under which current empirical investigations are carried out – conditions such as the kinds of firms that exist, their capital/labor ratios, the prevalent details of employment contracts – are themselves not labor-cost-minimizing adjustments to the existence of minimum-wage legislation. If minimum-wage legislation has been around for a long time, it would already have weeded out of the economy business practices and firms that are especially effective at employing disproportionately large numbers of low-skilled workers at wages below the government-stipulated minimum. Therefore, empirical studies done of changes today in the minimum wage will by their very nature be unable to capture the full effects of the minimum wage.

It’s entirely possible to think of times and places when one or other of these do in fact hold. That monopsony power did in fact hold back in the days of the one company town. There really was significant power over the workforce and in my native UK it led to the Truck Acts. Say a one mine town, the employer might pay the workers in tokens or credit at the company store. Which would then overprice the food that they bought with such tokens. The solution was, as those Acts forced them to do, pay the workers in real money so that alternative and non-rip off suppliers could emerge. When there are conditions of monopsony then yes, regulation can be entirely appropriate.

There are those who argue that the paucity of employment opportunities exists in this manner in some parts of the US economy. I think that’s a very hard argument to make except in the smallest detail.

http://www.forbes.com/sites/timworstall/2015/01/16/if-the-minimum-wage-doesnt-benefit-the-poor-then-whats-the-point-of-having-the-minimum-wage/?partner=yahootix

Buying votes? Keep the poor in a mindless trance of low expectations? Or, several labor unions peg their contract wage increases to increases in the min. wage.? Any other guesses?

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[seabass1985]

"Think For Yourself Question Authority, Throughout human history man has tried to find his venerable yet comfortable space in life." Timothy Leary.  But this question is a maze within its self because it seams to be a never ending cycle.

[TaunSew]

Stagflation seems to happen regardless..?

[username18333]

It could then be said that, since minimum wage work is often detrimental to a country (e.g., by promoting poor eating habits [and, therefor, poor health]), that it would generally be to the U.S.' benefit to pay "the working poor" not to work.

[grendel25]

Problem is with our legislators.  They are just too lazy and not thoughtful enough.  Something like minimum wage should have a mandated periodic review to ensure that it is specific and detailed to the needs of our society.  That means diferent levels of minimum wage based on inflation, family support, job sectors, etc.

[username18333]

The truth is that the State is a conspiracy designed not only to exploit, but above all to corrupt its citizens… Henceforth, I shall never serve any government anywhere.

The only absolute knowledge attainable by man is that life is meaningless.

Minimum wage enables the “citizen” to conceive a hyperreal (i.e., incontrovertibly non-arbitrary) meaningfulness.

[Rishblitz]

The problem is that more money the employers have to pay the higher and faster inflation builds so its an endless cycle.

[runningfree]

I think there are many entities that like inflation.

[TaunSew]

The problem is that more money the employers have to pay the higher and faster inflation builds so its an endless cycle.

There can be many areas which have not had a minimum wage increase in years and yet the cost of living is still increasing.  The real inflation isn't coming from working class people (who otherwise spend all their paycheques on groceries and rent) but fractional reserves in banking.

[Rishblitz]

The problem is that more money the employers have to pay the higher and faster inflation builds so its an endless cycle.

There can be many areas which have not had a minimum wage increase in years and yet the cost of living is still increasing.  The real inflation isn't coming from working class people (who otherwise spend all their paycheques on groceries and rent) but fractional reserves in banking.

Oh I wasn't blaming it on the working class I was just simplifying my point.

[98problems]

The real problem for the poor is that there is too much government interference. If it were not for the massive amount of government taxes and regulations then businesses would be able to pay the poor higher wadges.

A higher minimum wage is only going to hurt the poor because it will cause businesses to have a greater incentive to invest in technology that replaces low wage/skill workers which results in low wage workers to have less hours

[Rishblitz]

The real problem for the poor is that there is too much government interference. If it were not for the massive amount of government taxes and regulations then businesses would be able to pay the poor higher wadges.

A higher minimum wage is only going to hurt the poor because it will cause businesses to have a greater incentive to invest in technology that replaces low wage/skill workers which results in low wage workers to have less hours

the problem with a laizze faire system is that the working class can get screwed over big time.

[Mike Christ]

The real problem for the poor is that there is too much government interference. If it were not for the massive amount of government taxes and regulations then businesses would be able to pay the poor higher wadges.

A higher minimum wage is only going to hurt the poor because it will cause businesses to have a greater incentive to invest in technology that replaces low wage/skill workers which results in low wage workers to have less hours

the problem with a laizze faire system is that the working class can get screwed over big time.

I'd rather be screwed by my own stupidity than be screwed by something out of my control.

[TaunSew]

The real problem for the poor is that there is too much government interference. If it were not for the massive amount of government taxes and regulations then businesses would be able to pay the poor higher wadges.

A higher minimum wage is only going to hurt the poor because it will cause businesses to have a greater incentive to invest in technology that replaces low wage/skill workers which results in low wage workers to have less hours

the problem with a laizze faire system is that the working class can get screwed over big time.

When have we ever had LF?  Even the railroads had to be heavily subsidized back in the 1890s..

Have to recall that LF was really an academic reaction to economic interventionism and LF never really occurred (except in lawless areas).  LF to work requires a near-absence of the state in economic matters.

[runningfree]

Perhaps the increasing of the minimum wage is just another way to increase income tax revenues?

[Lethn]

Raising the minimum wage is another way for politicians to make themselves look good people fail to take into account that in order to pay for this they're going to force businesses out and create more inflation, it's that old problem of what's wrong with communism, if the state fixes wages or prices then everything else becomes more expensive in the long run as the free market tries to adapt to the new regime. Of course, not many will and in the end that just ends up with more people out of work since they can't afford to hire anyone.

The reason the poor are so poor isn't because of the 'evil' businesses refusing to give them a better wage, it's because of the hyperinflation currently being created by the very politicians trying to push for a minimum wage. The problem is though they don't have the maths to back up whether any of this will work, it will work in the short term but as they've chosen the narrative of blaming business owners while blatantly not looking at their own situations first.

Kind of pisses me off actually, but there you go, they've dug their own grave and I refuse to revel in their stupidity, the problems of the working poor and a destroyed middle class are not going to be solved with one simple piece of legislation. There is going to have to be catostrophic change for the problem to be really solved, I'm talking bankers getting thrown into jail and uncovering their co-conspirators.

Also, I'm not one of those Republicans who are saying businesses are flawless and the government should get off their backs, yes, there are cunts like Burger King who are making businesses easy targets, but it's the same with any group, don't think that the loudest always necessarily represent them. I bet you could find a business somewhere that pays it's employees as best it can and helps them out whenever that will probably get utterly destroyed by a minimum wage, but good luck finding solid reporting on that.

[picolo]

What's the Point of having it?

It’s not often that I agree with the New York Times on matters economic and it might be all the way back in 1987 that I last agreed with it on the subject of the minimum wage. But miracles do happen and so has one here. The NYT was once right on the subject of that minimum wage. They both argued that sure, we want to increase the incomes of the working poor. But doing so will mean that we do the insisting on improving the incomes of those working poor do the paying for the improvement. And also that the correct level of the minimum wage was then and is now zero. Yes, that’s correct, the proper rate for the minimum wage is $0 per hour.

Here is that editorial:

The Right Minimum Wage: $0.00

And here’s part of their argument:

Perhaps the mistake here is to accept the limited terms of the debate. The working poor obviously deserve a better shake. But it should not surpass our ingenuity or generosity to help some of them without hurting others. Here are two means toward that end: Wage supplements. Government might subsidize low wages with cash or payments for medical insurance, pensions or Social Security taxes. Alternatively, Washington could enlarge the existing earned income tax credit, a ”negative” income tax paying up to $800 a year to working poor families. This would permit better targeting, since minimum-wage workers in affluent families would not be eligible.

All entirely true. And we’ve had various papers just recently that back up this point. Here, for example, showing that minimum wage rises don’t in fact help the poor. The major consumers of the output of minimum wage workers are the poor themselves. Yet the majority of recipients of the minimum wage are not in fact those in poor households. Thus the poor themselves carry the burden of price rises that result from the minimum wage rise while they do not gain all of the income benefits from that rise. So, the poor in aggregate lose out.

And we’ve also got the fact that rises in the minimum wage really do destroy jobs. The last 30% rise in the minimum wage destroyed 0.7% of all jobs in the country.

Then today we’ve something very interesting from Don Boudreaux. He’ll forgive me quoting at length, for what he’s giving us is the theoretical points that must hold for it to be true that poor workers actually do benefit from a minimum wage rise:

(1) employers of low-skilled workers really do generally possess monopsony power, and

(2) that the super-competitive earnings by employers made possible by this monopsony power are not competed away on the output side of the market, and

(3) that the nature of the jobs performed by minimum-wage workers do not change significantly for the worse in response to minimum-wage legislation (for example, that employers of such workers do not respond to minimum-wage legislation by providing for their minimum-wage workers fewer on-the-job amenities), and

(4) that the existing conditions of employment under which current empirical investigations are carried out – conditions such as the kinds of firms that exist, their capital/labor ratios, the prevalent details of employment contracts – are themselves not labor-cost-minimizing adjustments to the existence of minimum-wage legislation. If minimum-wage legislation has been around for a long time, it would already have weeded out of the economy business practices and firms that are especially effective at employing disproportionately large numbers of low-skilled workers at wages below the government-stipulated minimum. Therefore, empirical studies done of changes today in the minimum wage will by their very nature be unable to capture the full effects of the minimum wage.

It’s entirely possible to think of times and places when one or other of these do in fact hold. That monopsony power did in fact hold back in the days of the one company town. There really was significant power over the workforce and in my native UK it led to the Truck Acts. Say a one mine town, the employer might pay the workers in tokens or credit at the company store. Which would then overprice the food that they bought with such tokens. The solution was, as those Acts forced them to do, pay the workers in real money so that alternative and non-rip off suppliers could emerge. When there are conditions of monopsony then yes, regulation can be entirely appropriate.

There are those who argue that the paucity of employment opportunities exists in this manner in some parts of the US economy. I think that’s a very hard argument to make except in the smallest detail.

http://www.forbes.com/sites/timworstall/2015/01/16/if-the-minimum-wage-doesnt-benefit-the-poor-then-whats-the-point-of-having-the-minimum-wage/?partner=yahootix

Buying votes? Keep the poor in a mindless trance of low expectations? Or, several labor unions peg their contract wage increases to increases in the min. wage.? Any other guesses?

The Right Minimum Wage: $0.00 Everyone has a right to work!

[username18333]

Raising the minimum wage is another way for politicians to make themselves look good people fail to take into account that in order to pay for this they're going to force businesses out and create more inflation, it's that old problem of what's wrong with communism, if the state fixes wages or prices then everything else becomes more expensive in the long run as the free market tries to adapt to the new regime. Of course, not many will and in the end that just ends up with more people out of work since they can't afford to hire anyone.

The reason the poor are so poor isn't because of the 'evil' businesses refusing to give them a better wage, it's because of the hyperinflation currently being created by the very politicians trying to push for a minimum wage. The problem is though they don't have the maths to back up whether any of this will work, it will work in the short term but as they've chosen the narrative of blaming business owners while blatantly not looking at their own situations first.

Kind of pisses me off actually, but there you go, they've dug their own grave and I refuse to revel in their stupidity, the problems of the working poor and a destroyed middle class are not going to be solved with one simple piece of legislation. There is going to have to be catostrophic change for the problem to be really solved, I'm talking bankers getting thrown into jail and uncovering their co-conspirators.

Also, I'm not one of those Republicans who are saying businesses are flawless and the government should get off their backs, yes, there are cunts like Burger King who are making businesses easy targets, but it's the same with any group, don't think that the loudest always necessarily represent them. I bet you could find a business somewhere that pays it's employees as best it can and helps them out whenever that will probably get utterly destroyed by a minimum wage, but good luck finding solid reporting on that.

The point is that Marxism and anarchism are built up on entirely different principles, in spite of the fact that both come into the arena of the struggle under the flag of socialism. The cornerstone of anarchism is the individual, whose emancipation, according to its tenets, is the principal condition for the emancipation of the masses, the collective body. According to the tenets of anarchism, the emancipation of the masses is impossible until the individual is emancipated. Accordingly, its slogan is: "Everything for the individual." The cornerstone of Marxism, however, is the masses, whose emancipation, according to its tenets, is the principal condition for the emancipation of the individual. That is to say, according to the tenets of Marxism, the emancipation of the individual is impossible until the masses are emancipated. Accordingly, its slogan is: "Everything for the masses."

Clearly, we have here two principles, one negating the other, and not merely disagreements on tactics.

(Red colorization mine.)

“The reason the poor are so poor . . . it's because” (Lethn) state, money, possession, and tribe are yet to be abolished.

[Brewins]

If minimum is too high people will just don't open the business or go informal or make a worker work for 5. Also the employ criteria will be too high, so most people will never get their first chance to get employed

Any way it will be bad.