My view on increasing the minimum wage isn’t ideological or political. It’s pragmatic. If increasing the minimum wage helps a lot more people than it hurts, I have no opposition to it. Additionally, if Robert Samuelson is characterizing the Democrats’ approach to doing it:
Democrats propose raising the present federal minimum of $7.25 an hour to $8.20 this year, $9.15 in 2015 and $10.10 in 2016. Assuming no job losses, almost 28 million workers would benefit by 2016, estimates the Economic Policy Institute (EPI), a liberal think tank. That’s about 17 million who now make less than the proposed minimums, plus 11 million slightly better-paid workers who would get increases to keep them above the minimum.
fairly it sounds like a pretty good approach. It would at least give the opportunity for course corrections. I think I’d spread it out a bit more, say, two or three years between rises but I suspect that their implementation schedule probably isn’t completely unrelated to calculations of electoral politics.
I do have a question, however. Let’s assume that your view is that a small or moderate increase in the minimum wage probably won’t have much adverse effect on employment. What’s being proposed is a 40% increase. Is a 40% increase “small or moderate”?
I also think that by far the more important issue is increasing the rate of domestic job production (which would itself increase wages paid). Clearly, Congress and the White House have no idea of how to do that.
To me, the key question is what % of minimum wage salaries end up supporting other minimum wage jobs; e.g. a checkout clerk at a grocery store goes to McDonalds for food. If it’s substantial, then it could spur job creation, since the increase makes it likely that the clerk will now order a burger and fries and possibly something else.
The best economic argument for putting money in the hands of the “working poor” is that they spend virtually all of it, unlike a tax break to the middle class, etc., who spend only a fraction of it.
No argument here on that. It’s why I thought the stupidest move by a stupid Congreess was reinstating FICA. If they were really interested in helping the working poor, they’d eliminate FICA. But it’s an empirical question rather than a theoretical one.
I think the concern with raising the minimum wage is not that people will lose their job (unemployment will rise), but that jobs that would start people out at a low wage will not be created. No job losses is not the same as loss of job gains. Personally, I don’t think it would be wise to raise the minimum wage until we approach full employment. I also don’t think tying the minimum wage to cost of living would be a bad idea, but I think as a political matter it might not create as much consensus as a defined plan.
Part of the problem is that the educational system has hollowed out its support for vocational and non-college-bound preparation, elevating the importance of unskilled labor getting that first job.
If you’re an apple buyer who buys in bulk and sorts his apples for quality, you will rate your apples on some kind of bell curve, with a few bad apples at the bottom, large numbers of apples hugging the peak, and some very few at very high quality. (number of apples on the vertical axis and price you can get [value] on the horizontal axis)
The truly bad apples, the 5% on the leftmost bottom of the bell curve you don’t even try to sell; nobody will buy them and, anyway, any profits will be eaten up by the costs of moving them. But you do have buyers for all the apples above the 5% point, some commanding low prices, many moderate prices, and a very few very high prices.
Now the gummint comes and tells you that you can’t offer for sale any apples below about 10% price mark on your bell curve. You are allowed to sell the apples of between the 5% and 10% price points, but, lo and behold, nobody will buy them. Of course!– you realize that if there were folks who would buy them at the higher price, you’d have been selling them at that higher price all along.
Those apples that used to feed lots of folks will end up in the dustbin of price-control history.
We are actively considering moving to the northeast (CT, MA, DE) precisely because of this. There are still genuine vo-tech high schools there. Our daughter is not on the doctor-lawyer-engineer path, but she’s very interested in the restaurant path as a chef. She can either spend 4 years in high school beating her brains out to learn algebra that will be of no use to her in life, or she can learn to knock out a béchamel, roast a chicken and control food costs.
The educational system in most states has nothing for her but a choice between “college-bound” and “special ed.” A lot of kids are not academic whizzes but could be great plumbers, electricians, cooks, HVAC techs or car mechanics. It’s frustrating. Everything short of lawyer-doctor-engineer is failure now, despite the fact that all the lawyer-doctor-engineer folks are in constant search of a decent handyman. Not to mention a good restaurant.
Jimbino:
Yes, but people are not fruit. The people you’re talking about can’t afford to live on what they are paid. So I may need to spend another 20 cents on a burger, or may need to see a slightly lower profit on my investments so that they can live on what they make.
Dave Schuler,
If FICA premiums were suspended, SS and Medicare recipients would have to be paid out of general revenues, meaning that seniors who did not qualify for SS or Medicare would be paying to support those who did. I suppose you’d then want to give all seniors SS and Medicare benefits whether or not they’d ever worked? Even if they’d arrived in this country at age 65? Maybe you think we should just give SS and Medicare to everyone while we’re at it? Why should anyone have to work, after all?
I don’t often agree with Michael. However, his education perspective is spot-on. Kids just aren’t all cookie-cutter cardboard images of each other, fitting nicely into a few life options. The myopic academic view, primarily relishing college prep curriculum, completely looses sight of giving equal opportunity to students with talents and skills outside of the higher achieving education realm. I applaud Michael’s open-mindedness to consider relocating his family in order to give his daughter broader choices — ones that feed into who she is, rather than what only the current educational models endorse.
Michael Renolds,
Yes people are not fruit. That’s why Al Gore invented the metaphor, the analogy and the allegory.
Will your daughter get the education in these concepts that was denied you?
Those people you want to spend your extra 20 cents on will be crying out for you to let them out of the dustbin. Or do you have a deus ex machina (Al Gore?) in mind who can create all that extra wealth, especially in view of the fact that China and other places are enticing our young, male, healthy, child-free producers of high value?
If Michael truly had any sense, he’d consider sending his daughter off to study, live and work in Germany, that past master of vocational education. Ohio comes closest in this country.
Then again, he might consider sending her off to study in one of those 13 countries that are economically freer than the USSA, one in which she can pursue her dreams and keep what she earns for herself and her family.
Jimbino:
Analogizing inanimate objects and humans has rather obvious limits. Limits so plain that the analogy is of no use. One of the useful things I learn in my job – the job that pays me to write analogies, similes and even the occasional metaphor – is that analogies etc.. must inform rather than obscure.
Jan:
Thanks. Of course I’m in the unusual position of having a job without geographical ties, so it’s a whole lot easier for me than for most folks.
My daughter has the gift of hard work and innate competence. In other words, Julia gets the job done. As a person who has employed other people, as well as being a former employee myself, I greatly value hard work and competence. I’ll trade a brilliant lawyer for a competent handyman any day – that deck isn’t refinishing itself, and I don’t think my lawyer will fly out and do it.
But moving back east would be a sad thing. Sunshine, baby. It’s all about the sunshine. Outranked only by the kids.
Strange that you should call apples inanimate. Did Al Gore say that?
In your job, did you ever come across Jesus saying:
Mark 4.10-13
“To you has been given the secret of the kingdom of God, but for those outside, everything comes in parables; in order that
‘they may indeed look, but not perceive, and may indeed listen, but not understand….”
And have you considered one of the many parables of Jesus, who didn’t even bother to use animate objects like apples to refer to people, but real inanimate objects, like believers=new wineskins, like Jesus=way, truth and light, and so on.
Are you gettin paid in that job writing similies, metaphors and analogies?
Yo Michael,
My Cuban, Mexican and Honduran laborers will build your deck for $7.25 an hour, and you won’t have to pay Dave Schuler’s FICA nonsense. They do know about as much math as the pre-laws I struggled to teach baby math and baby physics. They also have foreign language skills that most lawyers lack.
Jimbino:
Am I getting paid? No, it’s a charity I run.
My daughter has the gift of hard work and innate competence. In other words, Julia gets the job done.
What a treasured trait that is, Michael. She’s fortunate, and so are you and your wife.
And, even though you may have a so-called flexible job, you would still be making sacrifices in making such a move in order to improve your child’s opportunities. Not every parent is willing to do that. So, I’m just calling it as I see it, by giving you kudos for what I consider to be a rather unselfish perspective. I hope it all works out for your family.
Jan,
You must be mistaking this thread for a support group.
@Jimbino
Social Security payments do not depend on FICA taxes, and cutting taxes on working people does not equal nobody ever working again, an extraordinarily alarmist suggestion to make.
Jimbino,
…perhaps, it’s just a by product of being in a reflective mood.
Personally, I think the federal minimum wage should be low and indexed to inflation for practical reasons – every place is different and “one wage to rule them all” would be irrelevant in some places (NYC) and distortionary in other places (parts of Texas, for example).
A more radical proposal would be to scrap the current minimum wage scheme completely in favor of a different calculation that took into account differences in cost of living. This could take the form of federal incentives to encourage localities to keep their own minimum wage close to some reasonable standard.
I think PD makes a good point as well – if the minimum wage is too high, then teenagers will lose out on a lot of employment opportunities. I worked basically at the minimum wage from 16-19 and the jobs I had taught me much and earned me spending money – plenty for my purposes. I think that if the minimum wage were significantly raised that it might be a good idea to institute a “student” wage for youth.
In other news: Dave, have you heard that Baldur’s Gate II was re-released for modern PC’s and even the iPad?
http://baldursgateii.com/
Probably true in an abstract, academic sense; not true in the real world.
@michael reynolds
Tell your daughter, “you need to taste the love, baby.”
Social Security benefits ARE financed by FICA:
“Social Security is financed through a dedicated payroll tax. Employers and employees each pay 6.2 percent of wages up to the taxable maximum of $117,000 (in 2014), while the self-employed pay 12.4 percent.”
http://www.ssa.gov/pressoffice/factsheets/HowAreSocialSecurity.htm
You are fighting the wrong fight, Michael. In actuality, the apples and labor metaphor is accurate, as much as it might offend your sensibilities.
The better fight to fight is the argument that the increase in the minwage will be eaten by capital providers without throttling investment – a very, very dangerous assumption – and not be passed through to consumers, or if so, will be eaten by consumers and/or not reduce demand by consumers.
The effect on capital is well documented. In addition, do you really think consumers will stand by idly? I see no evidence. Wal-Mart customers moved seamlessly to Dollar General during the recession. Wal-Mart chose to offer, and consumers took, smaller portions to maintain the price point. I bet you don’t clip coupons. Many do. 20 cents on a $3 food unit matters to them.
The elasticities just don’t work for min wage.
Much better are powerful tools like fostering investment or a policy like a tax holiday to repatriate offshore risk capital. Both would not provide instant gratification, but would be much more eneficial for employment and therefore wages in the long run.
Raising the min wage is just feel good economics and a sop to the unions and their min wage indexed wages.
The minimum wage, like the “prevailing wage” of the notorious Davis-Bacon act, are great vehicles for discrimination against undocumented workers, minorities, young people and women.
Indeed, the impetus for passage of “prevailing wage” laws was the desire to keep Black Amerikans from moving to NYC and other strong union states and work for low wages, taking away those rich union sinecures held by Whites.
Red:
Ever notice how 100% of your policy prescriptions boil down to tax breaks for you?
An easy solution would be to have an automatic 10% increase each year. Businesses could plan accordingly, and they could raise wages and prices 10% each year.
If 10% were too low, it could be 75% or whatever makes the liberals happy.
Michael
Ever notice how incapable you are at making arguments rooted in real economics and business and investment realities, having to resort instead to shallow, feel good prescriptions which presume that your economic policy preferences intersect with reality??
Run along, back to working on your perpetual motion machine now.
Red:
Ever notice how we gave you and your ilk every damn thing you wanted under the previous president, and you promised us happy days, and then the economy blew up and everyone lost their jobs and their houses but you just got richer?
Yeah. You know dick about economics. You’re just greed under a thin veneer of pseudo-scientific bullshit.