Free market advocates are completely wrong about the minimum wage

[Phokus]

Noticed something else between Hong Kong, Aus, and the US:

https://en.wikipedia.org/wiki/List_of_countries_by_income_equality

Low income inequality to high goes like this:

Australia -> US -> Hong Kong.

The fact that 10% of people in Hong Kong making less than $4 an hour while income inequality is actually much higher than the US means the rich in Hong Kong are taking an absolutely ridiculous share of the income pie relative to everyone else, even compared to the US.

 

[Londo_Jowo]

Australia is by far more expensive that the US, my perdiem rate there is 2 to 3 times what it is in the US.

 

[Phokus]

Australia is by far more expensive that the US, my perdiem rate there is 2 to 3 times what it is in the US.

It looks like it's about 50% more expensive than the US, based on cost of living.

 

[BoberFett]

Here's another tidbit. There are different minimum wages for at different ages in Australia. A 16 year old in Australia does not make $16/hr, more like $10/hr. Considering the ages of people that work in fast food, I'd say the average wages of a fast food worker in Australia is probably NOT $16/hr.

 

[nehalem256]

Here's another tidbit. There are different minimum wages for at different ages in Australia. A 16 year old in Australia does not make $16/hr, more like $10/hr. Considering the ages of people that work in fast food, I'd say the average wages of a fast food worker in Australia is probably NOT $16/hr.

So much for the idea of equal pay for equal work huh?

 

[BoberFett]

It looks like it's about 50% more expensive than the US, based on cost of living.

Seems to depend on the metric you're looking at. Overall goods average out to about the 50% you're talking about, while rent is more like 70% more, and purchasing property is vastly more expensive.

http://www.numbeo.com/cost-of-livin...jsp?country1=United+States&country2=Australia

 

[Phokus]

Here's another tidbit. There are different minimum wages for at different ages in Australia. A 16 year old in Australia does not make $16/hr, more like $10/hr. Considering the ages of people that work in fast food, I'd say the average wages of a fast food worker in Australia is probably NOT $16/hr.

Still higher than the US, and it looks like the wage scales up until 20 years old where it's $16 . But since their unemployment is lower than ours, it means those unskilled adult Australians making minimum wage aren't going to be suffering either.

 

[Black Octagon]

I'm from Australia and it has in recent years become one of the most expensive countries on earth. That said, it's hard to state things like "things are twice as expensive as USA" without that being a massive generalisation. Are we talking about consumer goods? Food and groceries? Real estate? Utilities? Etc. Etc.

 

[rudder]

The Australian minimum wage is more than double the US minimum wage, but their prices are NOT double American prices. And their unemployment is LOWER than the US. I think most people would trade for that in a heartbeat.

Do these minimum wage earners in Australia get earned income credit from the government?

 

[Phokus]

Seems to depend on the metric you're looking at. Overall goods average out to about the 50% you're talking about, while rent is more like 70% more, and purchasing property is vastly more expensive.

http://www.numbeo.com/cost-of-livin...jsp?country1=United+States&country2=Australia

I would say it's still preferable because the GINI coefficient for the US and especially Hong Kong are much higher than Australia meaning the majority of the income is going to go to the wealthy in the US and Hong Kong, whereas a larger share of the income is going to go to the middle class/poor in Australia

Looking at hong kong, i don't see how you could possibly live on $8000 a year even if you had to share apartments, purchasing power in Australia is Higher than Hong Kong (mostly as the result of rent):

http://www.numbeo.com/cost-of-livin...ult.jsp?country1=Hong+Kong&country2=Australia

Edit: Maybe it's because the poorest of Hong Kong literally live in cages, that's despicable: http://www.nydailynews.com/news/world/wealthy-hong-kong-poorest-live-metal-cages-article-1.1258661

 

[soulcougher73]

These are private businesses. The employers are free to offer a wage. The government doesn't have the authority to force PRIVATE BUSINESSES to pay a certain wage.

Minimum wage isn't a right nor is a job a right. Employers will hire when they are growing and can justify hiring more people.

Apparently they do because theyve been doing it for years with coded law. What you deem a right is not what our government cares about. Yellings its not a right doesnt change reality.

 

[Phokus]

Do these minimum wage earners in Australia get earned income credit from the government?

I dunno, but it's kind of funny how an EITC is the supposedly 'less distortionary' method of alleviating poverty yet the unemployment rate is higher in the US.

 

[Mani]

Good info, backed by solid studies. Thanks for sharing.

 

[DucatiMonster696]

Disclaimer: I only tacitly endorse the minimum wage, i'm typically more sympathetic to guaranteed minimum income schemes (even some rightwingers like Milton Friedman advocated such schemes), but since it's a political non-starter i DO think minimum wage laws are better than the free market ideal of NOT HAVING any. And actually the minimum wage argument looks a lot better considering recent studies and real world effects:

First, lets take a case study of Hong Kong. Hong Kong is often used by free market advocates as one of the best examples of what capitalism has to offer. It's consistently rated as one of the most business friendly countries, if not THE most friendly business friendly country in the world. It has a slightly higher purchasing power parity than the United States.

Recently, they raised their minimum wage... to $3.90 an hour. Even by advanced western standards, this is a paltry sum. But here's the kicker: This new minimum wage raises the hourly wage of 10% OF THE CITY'S WORKERS. That means those people were making LESS Than that (looks like $3.64 at the older minimum wage). Without it, the 'natural' minimum wage is most likely to be even LOWER

http://www.bloomberg.com/news/2012-...e-minimum-wage-by-7-1-as-inflation-bites.html



If we took $3.90 and inputted it into this calculator to get the annual wage, you'd get a salary of $8112 a year. http://www.calcxml.com/calculators/pay04?skn=#calcoutput

That isn't even enough to live on in some developing countries. Hong Kong is one of the most expensive cities to live in as well, so the argument that workers would naturally demand more money and wages would naturally rise is a lousy one. People would rather take jobs even if it means it doesn't pay enough to get by rather than not have one. It's even shameful by US standards where the federal minimum wage is $7.25 and goes higher based on state and city laws (highest i think is around $10 an hour in san fran). Nevermind countries like Australia with a $16 an hour min wage.

Lets take a look at another experiement: the UK. Recently they upped their minimum wage as well, except it's more in line with western standards, to around $9.64 an hour. There were fears that this would create unemployment, except those fears were unfounded and it benefitted not only the minimum wage earners but PEOPLE ABOVE THEM, which actually had the effect of decreasing income inequality:

http://www.economist.com/news/finan...-moderate-minimum-wages-can-do-more-good-harm



Here's another study that showed that increasing minimum wage in the retail/food industry in the US had no negative effects on unemployment.

http://www.irle.berkeley.edu/workingpapers/157-07.pdf

It seems when we take a step back and look at the real world, the negative effects espoused by conservatives are way overstated (or even nonexistant) and in fact the positives overwhelmingly contribute to society as a whole.

The issue isn't that wages for those who are currently employed won't go up. The issue is that increases in minimum wage has a diminishing effect on the availability of these types of jobs for certain demographics of people that only have skills to attain a minimum wage job and the reduction and raising of hiring requirements/justification that occurs when wages rise.

Messrs Neumark and Wascher still demur. They have published stacks of studies (and a book) purporting to show that minimum wages hit jobs. In a forthcoming paper they defend their methods and argue that the evidence still favours their view. But even they are no longer blanket opponents. In a 2011 paper they pointed out that a higher minimum wage along with the Earned Income Tax Credit (which tops up income for poor workers in America) boosted both employment and earnings for single women with children (though it cost less-skilled, minority men jobs).

Even in the Britain example you see that wages for teenagers are kept below the market rate for minimum wage jobs. Why? Because this is a tacit acknowledgement of the damaging effect of raising these wages beyond certain limits for this demographic. Which consequently means the same would apply for the adult population because, SURPRISE the minimum wage even in Britain (which is only slightly higher than ours) is not and should not be treated as the progressive term called a "living wage", i.e. wage high enough to raise kids on in society for a job involving minimum amount of skill. Lastly its all great and dandy to argue for a minimum wage hike when you know that inflation (via currency devaluation and higher prices) would effectively nullify this wage in the long term.

In the end what you linked didn't provided anything new to the discussion other than the same old regurgitation of slanted arguments attempting to prop up a hike in the minimum wage which at best would be minimal but certainly not even close to the resemblance of the strictly politically drenched term of a "living wage".

 

[DucatiMonster696]

Noticed something else between Hong Kong, Aus, and the US:

https://en.wikipedia.org/wiki/List_of_countries_by_income_equality

Low income inequality to high goes like this:

Australia -> US -> Hong Kong.

The fact that 10% of people in Hong Kong making less than $4 an hour while income inequality is actually much higher than the US means the rich in Hong Kong are taking an absolutely ridiculous share of the income pie relative to everyone else, even compared to the US.

Income inequality rates don't mean much in the context of upward mobility and entrepreneurial rates which is what really matters in the long term. Additionally your characterization of the wealthy as "Taking" in regards to their wealth generating ability versus others presupposes the assumption that wealth itself is somehow a limited and constrained resource which cannot be replenished or grow to allow others to generate their own wealth in return and that somehow all the availability of wealth in the world has already be set in stone.

 

[rudder]

I dunno, but it's kind of funny how an EITC is the supposedly 'less distortionary' method of alleviating poverty yet the unemployment rate is higher in the US.

My point is you can't compare $16 in Australia to $7.25 in the U.S. for example a mother of 2 earning minimum wage at a full time job is actually earning like $10 something per hour when EIC is applied.

 

[Ns1]

The issue isn't that wages for those who are currently employed won't go up. The issue is that increases in minimum wage has a diminishing effect on the availability of these types of jobs for certain demographics of people that only have skills to attain a minimum wage job and the reduction and raising of hiring requirements/justification that occurs when wages rise.

ZOMG


someone who understands economics

 

[Genx87]

Obama wanted to push minimum wage closer to $9 an hour and doing so probably wouldn't affect unemployment much, if any, because it's most likely in the efficiency wage zone if 'only' a small percentage of people make minimum wage in this country, so it's actually an argument FOR a higher min wage than we currently have.

That is pure speculation. We have no idea what a 9 dollar an hour min wage would do in the labor market across the country right now.

I say having the vast majority of the country not working at min wage is an indication your premise the free markets dont work is wrong. The free market has determined labor is more valuable than the govt does.

 

[Kwatt]

My point is you can't compare $16 in Australia to $7.25 in the U.S. for example a mother of 2 earning minimum wage at a full time job is actually earning like $10 something per hour when EIC is applied.

If I understand this post correctly.

Then I would rather pay a little more for the service or let the company make a little less profit. Than have that difference made up with tax subsidies. Simply because I think the company would be more effective. The goverment does not appear as "bang for the buck" effective as I would like.



.

 

[mizzou]

all this thread does is make me not want to live in hong kong, unless I'm a fat cat