Minimum Wage

I'd like to hear opinions regarding the MW.. specifically as it stands in the US. Should it be abolished? Raised? Give me your thoughts.

ColeTrain: Based on what I've heard and read about the American minimum wage, I'd say it should be raised slightly.

admin: It's sad that you're all the way over in NZ
I'm sure you'd really be a great person to discuss this with, if it actually mattered to you, haha.
As far as raising it... a slight increase would likely be be beneficial comparative to the current, but a larger raise would be inherently detrimental.
Personally, abolishing it is a better solution. People won't work for lower wages, so employers would be forced to pay a respectable wage.

ColeTrain: I'd advocate raising it too.
I also don't think raising it in one large hop is a good idea, I think it should be a series of small hops.

ColeTrain: The minimum wage has good intentions and has had many dubious results. I would say the minimum wage should be abolished. First, i don't agree with the premise of it. The government is not responsible for most businesses. If a business goes bankrupt, does the government care? Only if they affected a significant amount of the economy. I think the only parties who have an interest in the value of labor is the employer and laborer. In practical terms, people who are less educated and less experienced have a more difficult time competing in the market. The minimum wage prevents them from selling their labor at a cheaper rate compared to those who are more experienced and more educated. When the minimum wage goes up, lesser valued employees will have their hours cut and people are often laid off.

On top of that, who can afford to pay the minimum wage? Not the average American small business, multiple studies have shown that majority of small businesses lay people off when the minimum wage increases. Large corporations can afford it and probably like the minimum wage because the costs go up on potential rivals. Majority of Americans are employed at small businesses not large corporations or the government.

I am a firm believer in the right to organize unions. I feel that people should be able to start a union or an association in order to protect the value of their labor if they feel it is necessary. This would be of great benefit for those who are less educated and less skilled.

nzlockie: Perhaps. It depends on how high those small hops go to. As I said, no MW would solve bad pay better than MW laws. With strict MW jobs, companies would outsource to get work done without paying as much to works. MW laws can facilitate outsourcing, so the best option imho is to abolish it completely.

True Capitalist Acolyte: The minimum wage has good intentions and has had many dubious results. I would say the minimum wage should be abolished. First, i don't agree with the premise of it. The government is not responsible for most businesses. If a business goes bankrupt, does the government care? Only if they affected a significant amount of the economy. I think the only parties who have an interest in the value of labor is the employer and laborer. In practical terms, people who are less educated and less experienced have a more difficult time competing in the market. The minimum wage prevents them from selling their labor at a cheaper rate compared to those who are more experienced and more educated. When the minimum wage goes up, lesser valued employees will have their hours cut and people are often laid off.
Yep.
On top of that, who can afford to pay the minimum wage? Not the average American small business, multiple studies have shown that majority of small businesses lay people off when the minimum wage increases. Large corporations can afford it and probably like the minimum wage because the costs go up on potential rivals. Majority of Americans are employed at small businesses not large corporations or the government.
Yep.

I agree with the majority opinion here. The minimum wage should be abolished.

Majority of Americans are employed at small businesses not large corporations or the government.
Hmm...

admin countered this claim in our OPEC debate, so maybe he can pitch in here.

nzlockie: admin

nzlockie

Either of you want to make an argument for that stance?

Blackflag: Sure, I'd defend that stance...

In a debate XD

admin: But not here?

Oh well, you didn't have what it took I guess.

Blackflag: Well, I defend it... the side of majority of MW employees employed by smaller businesses.
"Most minimum wage earners work for small businesses, rather
than large corporations."
[ http://www.alec.org/wp-content/uploads/Raising_Minimum_wage.pdf]

Blackflag: http://www.alec.org/wp-content/uploads/Raising_Minimum_wage.pdf

This link should work, sorry.

This is backed up by other sources as well:
http://www.wsj.com/articles/SB10001424052702304655104579163880944640994
https://www.minimumwage.com/2013/10/most-minimum-wage-earners-dont-work-for-large-corporations/
http://www.pachamber.org/pressroom/Mininum%20Wage%20Myths%20and%20Facts.pdf
https://www.epionline.org/oped/who-really-employs-minimum-wage-workers/

ColeTrain: Okay, so middle wage workers, which I definitely believe.

Me and admin did a debate on the US organization OPEC, in which he made an argument that small businesses compose less of the US working force than big businesses.

Blackflag: I guess I misinterpreted... specifically, MW earners are employed primarily of small businesses.

ColeTrain: Well, this died.... fairly quickly, much before I had enough time to actually dive into this in a somewhat comprehensive manner.

The MW is a disgraceful policy, and a classic case of "throwing out the baby with the bathwater." The arguments cited in favor of a MW hike are usually related to political economy, as opposed to economic research--unless you judge think tanks, like the Economic Policy Institute, who base their conclusions (e.g., "it'll create 84 quadrillion jobs!), as credible institutions, it's hard to find any reasonable research finding that it yields any of the benefits its proponents claim it does. At best, you'll find "no effect" or "modest" effects, but that won't deter intellectually dishonest political hacks from rendering dubious "stimulus" arguments.

And that's really the problem with the MW that extends into broader economic policy.... stupid people, masquerading as "serious," leverage their political background to make black and white arguments on issues that are in fact a whole more complex than they readily on, or that their parties (or malignant campaign advisors) will let them concede. Politics is black and white, after all, and foremost a marketing campaign, targeted toward stupid people.

Anyway... my rant aside... I think this is why framing the MW from a "should we abolish it, raise it," etc. standpoint is to reinforce the inherent lack of nuance in any economic debate where there are *necessarily* trade-offs and a whole hot of moving parts. We don't live in a vacuum such that we either do X or Y--there's an option Z, D, E, T, and a whole lot more. We could, for instance, keep the MW where it is, jack it up, index it, cut it, change the index, implement a multiple-tiered wage or progressive system of indexation, and a whole lot more.

That said, most people don't appreciate the finer points and the nuance. There are trade-offs associated with the MW: there *will* be job losses. I don't care what the EPI says--their methods are flawed, and based on underhanded confirmation bias. Likewise, Heritage is fudging the numbers when they scream "the sky is falling if we do this!" There will be job losses, but they're likely small, or at least proportional to the size and phase-in period of the policy change. That should be obvious to any remotely thinking person who has ever considered any economic issue ever.

The wrinkle? Some people will get a raise. Efficiency wage hypothesis is a shaky, highly theoretical process--and people, like Larry Summers, who cite this as a rationale for an exogenous wage hike fundamentally misunderstand--shocking, right?--that EWH applies to *downward* nominal wage rigidity (i.e., employers don't cut wages amid recessions, in part, because productivity would tank--there's absolutely no reason to think that they'd raise them to *increase* productivity). There's plenty of valid research disputing this nonsensical "free lunch," so there's no reason to really delve into it.

Any more benefits? Maybe. Some people might climb out of poverty, but many will be pushed into poverty if their equilibrium wage is below the price floor. That depends, of course, on the (a) size and duration of the wage hike; (b) size and duration of stabilizers; (c) scope of government investment in jobs training, or any other productivity-enhancing program; (d) the broader state of the macroeconomy; (e) supply elasticity; and a whole lot more. It's impossible to say, categorically, "poverty will decrease." The research on this is, likewise, split, but it's indeterminate without some prior knowledge of exogenous forces.

So I wouldn't raise it--I'd stick with a negative income tax and low-wage subsidies. But I can at least appreciate the trade offs.

JohnMaynardKeynes: Would you like a debate on this?

The truth is that the economy is good at sorting itself out, and neoclassical policies are the best options for growing economies. There are problems with the laizzez faire capitalist system, but the solution is not economic measures and varying degrees of control over the markets.