Comments on How Minimum Wage Laws Soak the Poor

Scott Martin commented on 'How Minimum Wage Laws Soak the Poor'

2008-09-11T06:08:27Z

You are right, we do have an ideological divide. I don't believe people are entitled to a damn thing simply for having the ability to breathe. Profit margins on the rise are a good thing, and workers are freer than they have been in recent history to recover any lack of increased wages through investment in the economy if they so choose.

Some ever changing definition of human decency is not the number one job of government, essential fairness is.

Russell Hellein commented on 'How Minimum Wage Laws Soak the Poor'

2008-09-11T05:56:10Z

Incidently I dont believe in "freedom" as you define it. I believe in human decency and leaving much of the US public in degrading economic situation (and I have worked for minimum wage at ages well past a teenager as many do)so that profit margins can grow even higher and return on investment is not how I define that. Its a basic philisophical difference between the right and left. The wealthy and corporate American are doing incredibly well. Its the poor and working class who need a break after three decades of conservative economic policy.

Look at real wages and profit margins over the last few decades sometimes. Compare them to the period where minimum wages grew quickly in the forties through the seventies. See what they say.

Russell Hellein commented on 'How Minimum Wage Laws Soak the Poor'

2008-09-11T05:51:23Z

In fact productivity is driven as much by extra hours and better hours than technology. That is yet another conservative myth, that we have made progress in productivity because of technology. The human elements is as important if not more so.

One of the amusing elements of conservative thought is that whenever their arguments are shown to be wrong, such that raising minimum wages leads to falling wages which has never been historically shown to be true, they come up with some excuse such as they were tied to past productivity gains. Gains which somehow magically never lead to wage gains until after minimum wages were passed.

In the zeros, when minimum wage was again frozen, and productivity soared at one of the fastest pace in US history, there were no net gains in real income till 2007 (that is things were worse in 2006 than 1999). Despite a recovery which began in 2002. One can argue that there is a lag between productivity and recovery and higher wages. One can not reasonably argue that it takes that long and it never has in any previous recovery. 2008 showed net negative median wages as we head into recession. In fact productivity no longer leads to increased real wages for most Americans.

One thing that is true is that for lower and lower middle income Americans minimum wage increases are not the best way to produce extra income although they do help marginally. Unions are a better way, but the best way is a negative income tax as Milton Friedman long argued.

We have followed conservative emphasis on low wages for a generation now including effectively freezing minimum wage, removing many restrictions on industry and weakening government oversight, free trade, and structural and technological restructuring. By any definition, the performance of the economy as it impacts most Americans has been lousy. The zeros are almost incomprhensibly so, I long argued it was physically impossible to have net negative real income, and this decade may yet prove me wrong. Certainly it has been the worse decade for wages in US history.

If we don't start doing something about that, and conservative won't address it any more than they have the last three decades, we are head for civil strife if not civil conflict on class grounds. I occured commonly between 1870 and 1940 receeding as wages grew quickly and disparity declined. We are running on borrowed time and the results of continuing to follow conservative low wage programs will be disaster if we dont stop them soon.

Scott Martin commented on 'How Minimum Wage Laws Soak the Poor'

2008-09-10T04:58:09Z

"There is no statistical evidence that raising minimum wage increases either unemployment or slows wages - proponents of this cite theory and the actual data after the last increase (and in states in this decade) fail to provide support for it. Indeed the evidence is in the other direction."

If you had actually read my piece, you would know that I agree with you there. I don't believe increases in minimum wage increase unemployment. They just take income away from higher skilled employees in the form of fewer working hours, and give it to highschool kids. Why do you think it is a good idea for productive workers to subsidize low-skill workers?

"I suggest a thought experiment. Look at periods where there was no minimum wage increases and look at poverty and income levels of lower income groups. Then look after there were minimum wage increases and see if poverty fell and real wages grew."

Straw man argument there. The income boom came due to increased productivity thanks to technological advances. We are so wealthy of a nation now, and access to wealth is so easy, that there is no need for it - and I doubt that there ever was.

If you believe in freedom, you cannot also believe in forcing employers to pay a certain minimum wage. Just as you can't also believe in preventing a person from taking a lower wage if he feels it is in his best interest to do so.

Russell Hellein commented on 'How Minimum Wage Laws Soak the Poor'

2008-09-09T21:43:54Z

Thus continues the most perninous of all conservative myths. That the way to help the poor, and workers generally, is to pay them as little as possible ideally nothing. Since 1981 we have followed this policy rigerously. Before the last set of increases minimum wage was at something like 40 percent of its 1979 value. And guess what, lower income groups did lousy under this policy.

Median wages grew about 10.3 percent in the seventies, about 8 percent in the eighties, rose to 9.8 percent in the nineties (largely because of a stock bubble that inflated wages) and then disapeared entirely. We just reached the 99 real median wage level (0 percent growth) in 07 and real wages in 08-09 will be negative - making the decade the worse in US history. We cut poverty down in half in the sixties and seventies, it remained far higher through the low wage era.

This occured despite record profits for corporations and return on investment for elites tied to the low wage policy of conservatives. Also to very high growth in GDP and productivity which is supposed to generate gains for workers - but no longer does.Lower income groups it might be noted did consistantly worse than other groups. So much for the myth.

There is no statistical evidence that raising minimum wage increases either unemployment or slows wages - proponents of this cite theory and the actual data after the last increase (and in states in this decade) fail to provide support for it. Indeed the evidence is in the other direction.

Why is not hard to understand, when you pay workers less and use that to increase profits and return on investment(the following will stun conservatives) workers do less well not better. I know that is a shocking view and contradicts everything that conservatives believe, but its historically accurate.

Having worked minimum wage jobs myself (including when I and most of my coworkers were very much the primary wage earner) I might note some further discrpancies. First analysis of who earns minimum wage in Cali showed that a signficant number of them were indeed the primary wage earner. Second when you increase minimum wage it generates gains throughout the work force. Not just below. The argument that minimum wage leads you to higher paying jobs is a joke. It leads you other low paying jobs because it teaches you no skills that are useful in higher paying work. Discipline and showing up for work, its only real use, are things people who get their first job out of college have no problem with - you don't learn these on the job primarily.

Anyone who has ever worked in a minimum wage job in the era of no increases likely noted something pretty obvious. There was nearly always not enough people to do the job. In classical theory that should have led to higher pay but in reality actual organizations are not rational as potrayed in market theory. They seek to minimize labor cost even if that conflicts with profit maximization. They always will have the functional minimum to do a job or less. That is a major reason that minimum wage does not in fact cause job loss. Its physically impossible to get rid of people and do the job at all.

A point that conservatives have never grasped, and which explains why we are headed to serious economic troubles, is that people who are paid so low they can't afford to buy anything dont buy anything. And if they don't buy anthing business can't sell goods. A point worsened by increased production tied to a shift in funds from wages to investment. In the thirties that reality was a major cause of the Great Depression and its returning now. When companies pay their employees more in contrast they buy more goods, which is why increased wages at the bottom does not create the ecoomic problems conservatives suggest.

I suggest a thought experiment. Look at periods where there was no minimum wage increases and look at poverty and income levels of lower income groups. Then look after there were minimum wage increases and see if poverty fell and real wages grew.

Scott Martin commented on 'How Minimum Wage Laws Soak the Poor'

2008-08-03T03:27:30Z

I'm not against immigration. What I wrote was, "Your comment also begs the question of whether we even want immigrants coming to a country that provides so much welfare to its citizens if they are not prepared to make a decent living from day one. I would say no."

When your grandparents immigrated, the United States was not a welfare state. It is unfair to current taxpayers to allow new immigrants to show up and receive immediate government benefits.

If you are willing to work for a living and learn the language of commerce in this country, then welcome.

Reid commented on 'How Minimum Wage Laws Soak the Poor'

2008-08-03T03:16:00Z

Good point, Hawaii's immigration environment is probably unique to the rest of the continental U.S.

It's dissapointing to hear your stance against immigration, my grandparents were immigrants, so with you in charge, i wouldn't even be here.

Scott Martin commented on 'How Minimum Wage Laws Soak the Poor'

2008-08-01T17:39:08Z

Perhaps you have a different type of immigrant in Hawaii than we have here. Most of ours in Arizona are from Mexico, don't speak English and make well above minimum wage rather quickly. A person who is willing to labor is going to get paid well if the labor is good.

Your comment also begs the question of whether we even want immigrants coming to a country that provides so much welfare to its citizens if they are not prepared to make a decent living from day one. I would say no.

Reid commented on 'How Minimum Wage Laws Soak the Poor'

2008-08-01T10:13:38Z

You've never seen anyone being helped by the minimum wage?

What about immigrants who are unskilled, speak little english, and have realistically zero chance at ever improving. We have thousands of these people in Hawaii, and without the minimum wage, these workers would be exploited for years.

They need the minimum wage to survive. They would work for less, but the minimum wage protects them to some degree.

Scott Martin commented on 'How Minimum Wage Laws Soak the Poor'

2008-07-31T20:54:13Z

Reid, I would get rid of the minimum wage. I believe workers and employers should be free to set a mutually-agreeable price for one's service without government intervention.

I don't see anyone being helped by minimum wage. I've never seen it. It's a barrier to people entering the workforce and it's a barrier to people moving up in their professions.

It's a subsidy of unskilled workers by the rest of society. Unskilled work is not something we should be promoting through subsidies.

Reid commented on 'How Minimum Wage Laws Soak the Poor'

2008-07-31T08:22:17Z

Good points, although i'm not fully onboard with your idea that there is no dropoff in productivity per dollar. Even if we disagree there, the fact remains that the minimum wage increase forced your hand so these are some good points.

My question now is what is your solution? Are you proposing no minimum wage? A minimum wage that never changes?

I still believe you need a minimum wage that rises with inflation. The minimum wage does not help everyone, and thats quite obvious, but the same can be said about every government program. The minimum wage still helps more than it hurts.

Dana commented on 'How Minimum Wage Laws Soak the Poor'

2008-07-30T23:08:31Z

The minimum wage increase is just Democratic show-boat politics. The simple fact is that there are very few workers at the minimum wage anymore, because the economy has simply moved beyond it. Even before the increase (and Pennsylvania's state MW increase), the traditional minimum wage employers -- convenience stores and fast food restaurants -- were starting people off at around $7.00 an hour, because they simply couldn't get anybody to come to work for less than that.

So, what do you have? You have a federal minimum that is really below the "economic minimum," which makes it meaningless. Yet if the minimum wage law was such that it actually gave people a substantial monetary raise, its complete disassociation with productivity would simply mean that it would trigger inflation, as the market had to adjust everything to make the minimum wage make economic sense again.

Scott Martin commented on 'How Minimum Wage Laws Soak the Poor'

2008-07-30T23:04:03Z

Actually, motivated high school kids generally become as productive as most long-term workers rather quickly in jobs like this. It took about two months, but after that time we were running ahead of where we were in terms of profit and service provided before the wage increase.

Of course you are correct that we could have done this at any time. However, the point is that we didn't because we valued our long-term, loyal employees. Nearly every company fails to fully maximize its profits out of reasons of loyalty, and this is a good thing. Most of us want reasonably good employees to have some level of job security with their employer.

What caused us to second-guess our loyalty to our employees was the minimum wage increase, which would have decreased our profits profits if left alone. I don't know if you think government policies should work to prevent companies from being loyal to their long-term employees, but I don't.

Reid commented on 'How Minimum Wage Laws Soak the Poor'

2008-07-30T22:51:23Z

In both of your examples where you cut the hours of workers making above minimum wage and gave them to the teens, you may have saved some money, but you also lost productivity. What does the raising of the minimum wage have anything to do with it? You could have done this before the min wage increase and it would have had the same effect.

Scott Martin commented on 'How Minimum Wage Laws Soak the Poor'

2008-07-30T17:57:52Z

Thanks, Bob.

Bob S. commented on 'How Minimum Wage Laws Soak the Poor'

2008-07-30T15:17:44Z

Some very good points. I really enjoy your articles and have shown them to a few of my friends who have enjoyed reading them also.
Thanks for your time & good luck.

Looking forward to more great reading!!

Bob