OT: Education and wages

Last week on CNN they had a piece on the minimum wage. Supporting the idea that the minimum wage was a positive step that should be taken were 5 noble laureates and 650 economists. With that many experts saying it's beneficial that seems pretty good to me. On the other side, opposing the minimum wage always seems to be businesspeople who stand to gain from paying less for labor. So on one hand you have tons of experts saying it's not harmful to the economy and on the other hand you have people benefiting by paying people less for their work. That's not a hard choice to figure out who to believe. Unless of course, your mind is made up to start with.

Hawke

Dan,

Refreshing post for this forum of mostly blind allegiance to liberal dogma.

The minimum wage is good for automation.

Clark

So, then, the lack of a minimum wage is good for keeping workers doing the work that machines could do, while the rest of the world kicks the crap out of you with automation?

Isn't the innovation and automation bit what we did so well once upon a time, while building the strongest economy and the best standard of living the world had ever seen?

BTW, the minimum wage hit its peak in 1968, in adjusted dollars.

-- Ed Huntress

Good suggestion.

GW

An oversupply of college graduates seems to be a growing world wide problem, or at least a growing world wide awareness. Scotland just discovered that many of their university graduates can only get jobs stocking supermarket shelves, and they are short of qualified tradespeople such as plumbers. I see a class action lawsuit coming on for making false claims about the value of a college education.

see:

It appears that education is subject to the same law of diminishing returns as everything else.

Unka' George (George McDuffee) .............................. Only in Britain could it be thought a defect to be "too clever by half." The probability is that too many people are too stupid by three-quarters.

John Major (b. 1943), British Conservative politician, prime minister. Quoted in: Observer (London, 7 July 1991).

Give it up, Ed, keep the government the hell away from the economy.

Let the market decide [the people minute by minute] make millions of micro decisions.

Some draconian interference to make wages higher or wages lower or prices higher or prices lower is a bad idea, across cultures and time.

Put you emotions aside and put your thinking cap on.

Try to use you imagination how Dan's example of $1000/ hour minimum wage causes problems and those problems are reduced penny by penny right down to the point of no government interference.

Try to focus on price controls causing gas lines in the 1970s.

Try to focus on Nixon's price supports of milk and cheese making millions of pounds of unused surplus.

Try to see how a market serves and the government screws up everything it touches.

Make two states, one with minimum wage and one without. People will move to the one without, just like they move away from communism and gun control.

Government is bad, the market is good, by popular consensus.

Clark

They just did, Clark. The people, minute by minute, say they want an increase in the minumum wage. The percentage who say that is running around

70% or more.

Why don't you check some facts before going off on a Gunner? Here's a quick rundown of minimum-wage increases and changes in employment since 1968:

1968, min. wage jumps from $1.40 to $1.60 (that's $8.66 in today's dollars). Employment rises 1.7%. 1974, min. wage jumps from $1.60 to $2.00. Employment rises 2.1%. 1975, $2.00 to $2.10. Employment rises 2.0%. 1976, $2.10 to $2.30. Employment rises 2.0%. 1978, $2.30 to $2.65. Employment rises 1.8%

And so on. The pattern holds. Employment rates are the same, roughly, in years with no increases as in years with increases. This is BLS and DOL data, straight from the government stats, not something filtered through a blog or nutball website.

What was that you were saying, Mr. economic philosopher?

-- Ed Huntress

Ed always forgets the Two Prime Directives of Economics

1. If you want more of something..subsidize it.
2. If you want less of something..tax it.

Increasing the minimum wage could well be considered a tax. And those minimum wage jobs tend to dry up, or become automated

It works this way in the garment industry, in fast food and so forth.

Gunner

Political Correctness

A doctrine fostered by a delusional, illogical liberal minority and rabidly promoted by an unscrupulous mainstream media, which holds forth the proposition that it is entirely possible to pick up a turd by the clean end.

Let's see your figures, Dr. Keynes.

Uh, oh, I didn't realize that Gunner is an expert on the garment industry. Fast food...well, maybe. d8-)

-- Ed Huntress

I'd laugh, but I'm too busy crying.....

[...]

Why do you have to jump to $1,000/hour? Doesn't that seem pretty obviously absurd and unworkable? I mean, yeah, if your idea of minimum wage is four digits per hour, it's no wonder you think it's a bad idea. Try plugging in $7.50/hour, which is the figure being talked about and see how all of the numbers work out.

================== Gunner you have a good grasp of classic supply:demand economics.

The problem is that "demand" can only be correctly determined when the price/cost of a good/service is accurately known. With the proliferation of "transfer payments," and "cost exterinalization," accurate determination of the total or real price is becoming increasingly difficult, and may, in practice, be impossible.

One example is that because of the low wages and general lack of medical insurance, most people being paid minimum wage must rely on the emergency room for even routine medical care. A major portion of any hospitals expenses dervive from non-reimbursed emergency room services, leading to higher prices for the paying customers and/or higher municipal taxes if they are to remain open. In the worst case scenerio, it has occurred that people with actual emergencies such as a heart attack have died waiting for medical help because of the ER congestion by minimum wage earners with routine problems. Thus, excessively low wages and no benefits, can cost you your life as well as higher taxes.

Other examples include higher school costs because of "free" meals for children of minimum wage parents.

While low wage labor may indeed be profitable for the less ethical employer, and may indeed keep marginal business in operation, are you willing to pay higher taxes and possibly lose your life to do so?

If a business is unable or unwilling to pay a reasonable wage, do we really want, or can we afford, to have it in our community?

Unka' George (George McDuffee) .............................. Only in Britain could it be thought a defect to be "too clever by half." The probability is that too many people are too stupid by three-quarters.

John Major (b. 1943), British Conservative politician, prime minister. Quoted in: Observer (London, 7 July 1991).

I used $1000/ hour because if a minimum wage really worked it ought to work at higher levels than proposed. And it obviously does not. In Washington State the minimum wage is $7.25 and has no effect at least in Western Washington. The reason is that you can't get anyone to work for $7.25 here. Kids doing yard work get $10 / hour. So what is the effect? Even in yard work there is a shift to increasing the capital needed. There is no hiring a kid to use a push mower, not even a gas powered push mower. Most of the lawn here are mowed with lawn tractors.

So who benefits? Not the kids. But those that manufacture lawn tractors and those that can afford to buy a lawn tractor, trailer , and truck to haul the lawn tractor around. If we boosted the minimum wage a lot higher, the people that would benefit would be those making lawn mowing robots.

Dan

Ed, You know that corrolation does not mean cause. A very likely reason the minimum wages rose was because the economy was healthy and employment was rising. That is much more likely the cause than that minimum wages went up and increased employment.

I expect more logical arguments from you.

Dan

Sorry Ed,

I already am a world class expert on the minimum wage and its econmic effects. I had some world class economic courses in college and have remained interested in economics since then. Those graphs at the web site you posted are very crude. I don't think that anyone uses straight lines for graphs anymore except for introductory economics courses where the students have limited math skills.

It is you that needs to understand that the minimum wage does not help the unskilled. It does help the skilled that build things that eliminate unskilled jobs. As long as the minimum wage is close to what the wage for unskilled labor would be in the market without a minimum wage, the effect is small. The minimum wage is very helpful to places as New Jersey and New York in that it increases the cost of labor in places as Mississippi. And therefore helps the places with high labor costs. So go on and push for the minimum wage. It will create more jobs overseas and help the overseas economy.

It used to be that the United States could ignore the rest of the world, but it is no longer true. Container ships have decreased the cost of shipping. And because shipping costs are lower, other countries can compete. At first it was their very low wages, but now those countries have increased their technical knowledge and are also competing on performance. Your example of GM shipping their technical knowledge is not a good exemple. What those countries really want is Toyota's technical and management knowledge.

Dan

One must first define "reasonable wage" for each type of labor. Is a pimple faced kid at the drive up window worth $15 an hour? Will having crews of them raise the cost of doing business to the point that the fast food will be priced out of the market? If so..then we have lost both the employment wages of those kids, the taxes to the government and the fast food itself.

There is also the fact that minimum wage jobs should be considered Entry Level and not a job one raises a family on.

Lets say the minimum wage goes to $15 universally here in the US. Prices of goods and services will also rise so there is a typical profit margin. Now all goods and services become very expensive..and that $15 is no longer enough to raise a family on..so the minimum wage would again have to be raised upwards..resulting in an upwards spiral of wages/goods and sevices/higher wages. That's called inflation.

One mearly needs to look at MickyDs for an example. As Im sure most of us old farts recall.. the basic cheap burger at Micky Ds was $. 17 in the early 1970. You could indeed get a coke, a burger and fries and get change back from a dollar bill. Now the cheapest combo is $3.75. Im pretty confident that the owners profit margin hasnt gone up 400%. So we are forced to look at the root causes of that increase in price. Has the cost of raw materials gone up that much? Yes. And why? etc etc.

While a cost of living increase is desireable..that cost of living increase is the result of ..increased wages adding to the costs an employer must overcome.

Its walking a tight rope. Too much..and its an inflationary spiral, too little and the entry level people go on welfare.

Shrug

Gunner

Political Correctness

A doctrine fostered by a delusional, illogical liberal minority and rabidly promoted by an unscrupulous mainstream media, which holds forth the proposition that it is entirely possible to pick up a turd by the clean end.

A rise in minimum wage generally has the effect of increasing the disposable income of the working class. This translates into more demand for consumer goods which in turn forces an increase in manufacturing capacity and thusly to an increase in employment. One would be well advised to consider just what the union movement did for the economy of North America. Ford etal. would never have been able to build the manufacturing empire they did without the well paid and secure jobs that resulted. Of course this is a 'snake eating tail' kind of economics - no different than the 'endless growth' (lowest bidder) model that falsly underpins today's global economic theory. Growth has, as it's nemisis, the law of dimishing returns. In the end it all falls down.

Ken.

Lowes, Auburn WA starts at roughly minimum..Home Depot, Kent WA starts at roughly minimum, the majority of fast food jobs in the same area start at roughly minimum (variations if they want better than average). I understand that you are making a point but you've blown your start by gross distortion.

And no, there is no argumentative truth that a minimum wage grossly out of whack ($ 1000/hr) with the norm should also work. See "straw man" argumentative fallacy,

What is being discussed is bringing the minimum wage back to LESS than it has been in the past but more than it currently is...not some "pie in the sky" number to prove a point.

By your same argument, those in the Military should not recieve either pay raises nor COLAs because it'll hurt the economy (taxes taxes taxes to pay em! if they think they can do better in the free market, let em!). Had a "lefty" said such, most righties here would be popping a cork.

Ever calculate man hours vs weekly cost for those yard guys? In most of King County, you'll find the guys making bare minimum wage. If you get someone really low in price, expect illegal aliens at lower than minimum (but that's another debate). It costs about the same as a "local kid" but they show up rain or shine, have the tools to do the job, and get er done FAST. Volume makes them able to afford faster and larger equipment which in turn means they can increase their volume. Standard business model that has nothing to do with kids not working. They do a better job therefore they get the business.

A minimum is in place because in the past, desperate people could be put into even more desperate situations simply to keep from starving to death...watch the Grapes of Wrath again. My mother was born in a company mining town in Utah...Owed the company store most of my Grandfather's salary just to cover company housing and food. Desperate times make desperate people and fatter investors. To basically "escape", Grandma cooked in the bording house and took the scraps home instead of using the company script. This let them finally catch up.

Minimum wages are set at what's barely able to keep a roof over your head and barely able to keep your belly filled. Costs for that roof and sustinence go up..time to get real and raise the minimum to match. Or....15% of the country can start picking peaches for $ .05 a bushel again and we'll see how "wonderful" those free market times were.

koz

Okay, so I'm late and catching up, but Gunner wrote on Tue, 14 Nov 2006 19:02:54 GMT in rec.crafts.metalworking :

Three is also the element of "don't like this job? Get a better one." I recall an argument _for _ raising the minimum wage, and the misfortunate person interviewed (whom I'll call Sally cause I forgot her name)was an early twenties living at home, working less than 40 hours a week at the minimum wage job, and the poor dear was just bummed. But she was thinking to taking some classes at the community college to get a better job. So right now, she's working for dating money, but thinking of getting an education and a Real Job. But the compassionate liberals don't want her to have to do that, so they want to double her pay by fiat. And if she's making twice as much as she is, what incentive does she have to "better herself"?

Hey, if I could make 30,000 a year working part time, I'd do it too. But I can't, so I work 50 hour weeks. "Eh, its a living."