Is it time to replace slave (minimum) wage with human wages?

[BigChickenJim]

In theory communism works but the reality of it is that it doesn't work. Hmm why is that? Could it be that simple theories don't account for the non logical behavior of humans? Could it be that there are many factors involved other than a few variables?

So yes, in a vacuum a rise in labor costs would cause either higher unemployment and/or higher prices. The problem, of course, is that we don't live in a vacuum, the reality doesnt match the theory.

You can keep spouting theory all day but it has absolutely zero to do with reality.

Here is a meta study on the affects of raising minimum wage:

http://www.cepr.net/documents/publications/min-wage-2013-02.pdf
(hint: most studies show no statistically important affects, there were some studies that did show a negative affect and some showed a positive affect).

If its basic economic knowledge, according to you, then why are there so many studies that don't support the theory?

It's a good thing you aren't my professor, then again they don't teach common sense as fact or a substitute for real science, so I doubt you would be teaching anyone anything.

So both arguments lack conclusive, concrete evidentiary backing. I've seen the studies and already knew that--I even said as much in my first post. When such a situation arises, standard protocol is to fall back on conventional wisdom and previously established facts, not nebulous references to possibly irrational behavior or unforeseeable inconsistencies. Common sense is, in effect, the application of previously validated theories or facts to a given situation. There's nothing wrong with that. In fact, it's the basis of human reasoning.

Regardless, assuming that aggregate groups of people--corporations and small businesses in this case--will somehow behave differently than one would expect a rational, profit-driven entity to is not consistent with real-world behavior. There will always be variations, to be sure, but as a rule businesses will seek to protect their profit using the most efficient means available. Whether that translates into using cheaper equipment, raising prices, or slashing their workforce will depend on the situation. However, the fact that a much higher minimum wage could potentially cause harm to employment should be enough to invalidate its reason for being. If you are providing a higher quality of life for someone by potentially harming someone else, haven't you philosophically violated the spirit of the proposition?

As you know, my stance is that nobody is owed anything more than the right to survive at a minimal level in our society. The current minimum wage provides that baseline and then some. Any level of comfort or quality of life above that is something that must be earned, not given. That is rugged individualism and it is the foundation upon which this nation is built.

 

[Chris A]

Lots of people make a small amount above minimum wage. This is to help ensure that they won't leave. Raising the minimum you would think would cause them to raise their wages too. Would this in turn start wage inflation? Along with real inflation?

 

[Atreus21]

How about we stop fixing prices and let prices work?

 

[Patranus]

How about we stop fixing prices and let prices work?

That would require the progressive to give up this idea of social and economic justice.

 

[Darwin333]

How is it right that we have homeless children dying from exposure and starvation in ditches, while someone else has billions, and is living in disgusting excess. How is it right at all.

Homeless children are not dying from exposure and/or starvation living in ditches in the United States. If there are a few cases of that it is solely the fault of the parents not taking advantage of the programs we have to prevent exactly that.

Or are we talking about the entire world? We would have to reduce our standard of living quite a far way in order to achieve your goal.

 

[Darwin333]

Thats the point you seem incapable of understanding, raising the minimum wage does not increase the cost of labor for the entire country. The amount of workers on minimum wage is less than 3% of the hourly work force.

Your understanding of how minimum wage impacts the economy is just simply wrong and evidence of that is your use of government labor rates for labor that is not paid at the minimum wage level.

The op referred to current min. wages as "slave wages" and said we need to raise them to "human wages". This implies a very significant increase of minimum wages which would in fact ripple all the way up the line. If you increase min. wages to $16 a hour you don't think that someone working in a skilled position is going to be happy with keeping his $16/hour pay, do you? Or do you think that skilled labor and unskilled labor would basically be worth the same thing at that point?

Your understanding of how minimum wage impacts the economy is just simply wrong and evidence of that is your use of government labor rates for labor that is not paid at the minimum wage level.

At no point did I use government labor rates, you should try actually reading what I have posted and the links, but it is quite obvious that you still don't understand the very simple concept of labor burden and how it differs from labor rates. This really is a simple concept but McD's has labor burden on every single person they employ but due to its confidential nature they aren't going to post it online. I used .gov articles (they weren't .gov labor burden rates either) because they have lots of documentation on labor burden rates for various reasons and the articles they had written on it were dumbed down quite a bit. Evidently not enough for you but luckily most people who matter get the concept. The ones that don't go out of business.

 

[Darwin333]

No not because I say so, because the CBO says so plus a ton o other studies. Did you have something to the contrary? If you did you would have posted it when I asked for citations earlier.

Econ 101 is a great start, but there is more to economics than Econ 101, perhaps you could take some more advanced classes.

You can't comprehend very simple concepts like the difference between labor rate and labor burden.

Again, we are not talking about raising min. wage by a few percent or a dollar or two. We are discussing changing a supposed slave wage to a human or livable wage. I invite you to reread the OP if you are still confused.

If you would like to discuss the impact of marginal increases to minimum wage, which is what those CBO articles you cite discuss, it would probably be best to start another thread.

 

[Darwin333]

Again if you raise the minimum wage, you will have more people entering the job market. With more decent humane wages more will be able to work, and productivity of society will significantly increase.

Wait... poor people aren't entering the workforce because they would rather no pay than some pay?

 

[DucatiMonster696]

How about we stop fixing prices and let prices work?

That's basically the Austrian view.

Being that wages and other asset prices were themselves all affected by the artificial boom via the misallocation of resources, in the Austrian view continuing the distortion via a monetary policy of sustaining asset prices causes more harm than good.

Additionally allowing inflation to cut wages ends up, again in the Austrian view is actually creating more problems in the economy by aggravating unemployment and wage declines in the face of this inflationary scenario where wages are allowed to fall as a matter of monetary policy, asset prices are sustained or allowed to rise, and the money supply is increased as again a matter of monetary policy.

Hence in the Austrian perspective from what I know it states that while wages should be allowed to fall as a correction to the distortion created by the artificial boom, most importantly other asset prices in the marketplace should be also be allowed to fall and correct themselves in order to the clear out the distortion of their prices created by the boom. Thus in the end the Austrian view states that the faster the fall of both wages and asset prices occur in the economy the quicker you'll see a economic recovery once both wages and asset prices reach their real market levels for sustainability and eventual setup a scenario of growth.

However the Keynesian view however is that non-wage asset prices should be propped up by monetary policy via inflation, real money wages should not be cut directly but instead eroded via indirectly via inflation and unemployment treated by an expansion of government spending while continuing the same monetary and interest rate policy that created the previous boom. Which in the view of the Austrian camp inevitably ends up to creating another artificial boom follow by a inevitable bust.

The degree and nature of the next bust itself is determined by the degree and nature of the artificial boom created which proceeds it. In other words the bigger the boom the larger the bust and if government and central banks attempt to advert said bust or reduce it affects it just prolongs the misery for everyone and creates more issues in the economy, i.e. 1970's stagflation or today's anemic job growth dominated by minimum wage and temporary/part-time jobs, etc.


IMHO from what I've read and understand personally on the matter instead of advocating for a minimum wage hike, will inevitably still lead to it being eroded via inflation we should be demanding that asset prices not be propped up by inflationary monetary expansion and that the dollar should be allowed to strengthen.

Additionally even if you were to tie the minimum wage it into the CPI it would still be eroded by inflation if we continue the same monetary policies because the CPI is a statistical index that can and is manipulated to mask inflation, i.e. if there was no inflation occurring today we would not be having this discussion about creating "living wages" for bottom of the barrel jobs that anyone could fill because wages would be holding steady or increasing in regards to the value of the dollar and asset prices would not be climbing significantly faster than wages are able to keep up. But again this is my opinion on the matter.

 

[fskimospy]

That's basically the Austrian view.

Being that wages and other asset prices were themselves all affected by the artificial boom via the misallocation of resources, in the Austrian view continuing the distortion via a monetary policy of sustaining asset prices causes more harm than good.

Additionally allowing inflation to cut wages ends up, again in the Austrian view is actually creating more problems in the economy by aggravating unemployment and wage declines in the face of this inflationary scenario where wages are allowed to fall as a matter of monetary policy, asset prices are sustained or allowed to rise, and the money supply is increased as again a matter of monetary policy.

Hence in the Austrian perspective from what I know it states that while wages should be allowed to fall as a correction to the distortion created by the artificial boom, most importantly other asset prices in the marketplace should be also be allowed to fall and correct themselves in order to the clear out the distortion of their prices created by the boom. Thus in the end the Austrian view states that the faster the fall of both wages and asset prices occur in the economy the quicker you'll see a economic recovery once both wages and asset prices reach their real market levels for sustainability and eventual setup a scenario of growth.

However the Keynesian view however is that non-wage asset prices should be propped up by monetary policy via inflation, real money wages should not be cut directly but instead eroded via indirectly via inflation and unemployment treated by an expansion of government spending while continuing the same monetary and interest rate policy that created the previous boom. Which in the view of the Austrian camp inevitably ends up to creating another artificial boom follow by a inevitable bust.

The degree and nature of the next bust itself is determined by the degree and nature of the artificial boom created which proceeds it. In other words the bigger the boom the larger the bust and if government and central banks attempt to advert said bust or reduce it affects it just prolongs the misery for everyone and creates more issues in the economy, i.e. 1970's stagflation or today's anemic job growth dominated by minimum wage and temporary/part-time jobs, etc.


IMHO from what I've read and understand personally on the matter instead of advocating for a minimum wage hike, will inevitably still lead to it being eroded via inflation we should be demanding that asset prices not be propped up by inflationary monetary expansion and that the dollar should be allowed to strengthen.

Additionally even if you were to tie the minimum wage it into the CPI it would still be eroded by inflation if we continue the same monetary policies because the CPI is a statistical index that can and is manipulated to mask inflation, i.e. if there was no inflation occurring today we would not be having this discussion about creating "living wages" for bottom of the barrel jobs that anyone could fill because wages would be holding steady or increasing in regards to the value of the dollar and asset prices would not be climbing significantly faster than wages are able to keep up. But again this is my opinion on the matter.

The main issue here is that the malinvestment hypothesis has basically been proven false by the past five years. If the issue were simply that not enough people were making the things that people wanted but that demand for goods that people DID want remained the same, the vast amounts of liquidity and money that have been pumped into the system over the last five years should have led to HUGE inflation as everyone tried to use that extra money to buy those few goods that were in demand.

This didn't happen.

This is one of the reasons why Austrian economics has been dealt such a devastating blow by this economic downturn. The things they predict should happen if their theories are correct.... well... didn't happen. That's pretty strong evidence that they theory is just wrong, and that Austrian economics represents a fundamental misunderstanding of how the world works.

 

[DCal430]

Wait... poor people aren't entering the workforce because they would rather no pay than some pay?

It cost them more money to hire a baby sitter for the children, to get transportation to work, then it would for them to college government aid, and stay at home.

 

[michal1980]

It cost them more money to hire a baby sitter for the children, to get transportation to work, then it would for them to college government aid, and stay at home.

another good argument to lower handouts.

 

[shortylickens]

According to Illegal Apologists, the reason we have so many illegals is they are willing to work for wages that americans wont. Their theory is almost anything we do will just encourage businessmen to lay people off and get more indentured servants from Latin America.

 

[Zorkorist]

The main issue here is that the malinvestment hypothesis has basically been proven false by the past five years. If the issue were simply that not enough people were making the things that people wanted but that demand for goods that people DID want remained the same, the vast amounts of liquidity and money that have been pumped into the system over the last five years should have led to HUGE inflation as everyone tried to use that extra money to buy those few goods that were in demand.

This didn't happen.

This is one of the reasons why Austrian economics has been dealt such a devastating blow by this economic downturn. The things they predict should happen if their theories are correct.... well... didn't happen. That's pretty strong evidence that they theory is just wrong, and that Austrian economics represents a fundamental misunderstanding of how the world works.

Minimum wage is just a symptom, of Government gone wild.

Once you have minimum wage, then supply and demand, and other economic principles do not work.

Minimum wage, is enforced by Government. With armies behind them.

Don't even begin to discuss economics, when one side has armies, behind them.

-John

 

[DucatiMonster696]

The main issue here is that the malinvestment hypothesis has basically been proven false by the past five years. If the issue were simply that not enough people were making the things that people wanted but that demand for goods that people DID want remained the same, the vast amounts of liquidity and money that have been pumped into the system over the last five years should have led to HUGE inflation as everyone tried to use that extra money to buy those few goods that were in demand.

That's not necessarily true in terms of what the Austrian view is talking about when they talk about inflation. For Keynesians inflation is basically something that is only ever really measured or talked about via the weighted average statistical analysis of the CPI and whether that index moves up or down.

However the Austrian view is that any expansion (i.e. printing of more money into circulation than is in demand) of the monetary supply is by definition inflationary but how and where that increase supply of dollars is manifested and felt is the more complex issue at hand in the discussion of monetary inflation. Additionally Austrians view on deflation is that is a necessary component of economic recovery as its contraction of the money supply allows for the clearing of mal-investments in the economy and incentives and rewards savers in the economy because in the Austrian view savings equals future spending.

But getting back to the discussion on inflation, depending on the monetary policy at work the manifestation of inflation may be easy or harder gauge throughout the economy than the CPI would lead someone to believe because inflation does always affect all wages, prices, etc in the same way.

Hence inflation in the Austrian view can be spread out throughout the economy at different rates and into different areas of the economy causing rising asset prices for certain segments of the economy which are not measured accurately by or acknowledge by the CPI to climb in the face of what the CPI indicate as non-inflationary environment. One example would be the stock market where we can best see the effects of inflation. Rising stock prices in the face stagnate wages, anemic unemployment, etc are in the Austrian view a classic sign of inflation. Of which has occurred due to QE and the low interest rate policy which have disincentives banks from lending out that money and instead made it more profitable for them seek higher yields via stockmarket investments.

This is one of the reasons why Austrian economics has been dealt such a devastating blow by this economic downturn. The things they predict should happen if their theories are correct.... well... didn't happen. That's pretty strong evidence that they theory is just wrong, and that Austrian economics represents a fundamental misunderstanding of how the world works.

Inflation is there in lagging wages, you see in the stock market that has risen despite lackluster fundamentals in place to support the notion of a "economic recovery", and which starts to sell off the moment Ben Bernanke even hints of cutting off its supply of cheap money by scaling back the Fed's QE program. Another key component in this story is the role of interest rates and its effect on allowing the FED to contain all that liquidity in the banking system. Yet interest rates can only be held down for so long and as of late the FED has given up on attempting to hold back long term rates but it still is holding a finger on short term rates while it continues inflating a mother of all bond market bubbles.

 

[fskimospy]

That's not necessarily true in terms of what the Austrian view is talking about when they talk about inflation. For Keynesians inflation is basically something that is only ever really measured or talked about via the weighted average statistical analysis of the CPI and whether that index moves up or down.

However the Austrian view is that any expansion (i.e. printing of more money into circulation than is in demand) of the monetary supply is by definition inflationary but how and where that increase supply of dollars is manifested and felt is the more complex issue at hand in the discussion of monetary inflation. Additionally Austrians view on deflation is that is a necessary component of economic recovery as its contraction of the money supply allows for the clearing of mal-investments in the economy and incentives and rewards savers in the economy because in the Austrian view savings equals future spending.

But getting back to the discussion on inflation, depending on the monetary policy at work the manifestation of inflation may be easy or harder gauge throughout the economy than the CPI would lead someone to believe because inflation does always affect all wages, prices, etc in the same way.

Hence inflation in the Austrian view can be spread out throughout the economy at different rates and into different areas of the economy causing rising asset prices for certain segments of the economy which are not measured accurately by or acknowledge by the CPI to climb in the face of what the CPI indicate as non-inflationary environment. One example would be the stock market where we can best see the effects of inflation. Rising stock prices in the face stagnate wages, anemic unemployment, etc are in the Austrian view a classic sign of inflation. Of which has occurred due to QE and the low interest rate policy which have disincentives banks from lending out that money and instead made it more profitable for them seek higher yields via stockmarket investments.

So an tripling (TRIPLING) of the monetary base turned into inflation by having the stock market basically go back to a bit less than it was before the crash. (if we're talking about the time period of this huge monetary expansion) This is all happening despite very low inflation of actual goods. That's your inflation.

None of that explains why the prices of goods that are not the products of malinvestment have not gone way up. There's a lot more money chasing them, why aren't people charging higher prices? Furthermore, I am not aware of a single solitary Austrian economist that claimed the massive expansion of the Fed's balance sheet would not result in significantly higher consumer prices, but would simply lead to an increase in stock prices. Not one. I can however show you endless video of Austrian economists predicting huge inflation... hyperinflation even, resulting from that action. They were clearly and inarguably wrong.

You're right that the Austrian view is that money printing is by definition inflationary, I'm just saying that the evidence clearly shows that the Austrian view is wrong. They made predictions, clear predictions. Those clear predictions didn't happen. (in fact, the opposite happened) At what point do you simply say "man, I need to re-think my understanding of economics"?

Inflation is there in lagging wages, you see in the stock market that has risen despite lackluster fundamentals in place to support the notion of a "economic recovery", and which starts to sell off the moment Ben Bernanke even hints of cutting off its supply of cheap money by scaling back the Fed's QE program. Another key component in this story is the role of interest rates and its effect on allowing the FED to contain all that liquidity in the banking system. Yet interest rates can only be held down for so long and as of late the FED has given up on attempting to hold back long term rates but it still is holding a finger on short term rates while it continues inflating a mother of all bond market bubbles.

Inflation is there in 'lagging wages'? That is just not inflation as it is defined. Nothing you are describing is in fact inflation as defined.

 

[Atreus21]

That's basically the Austrian view.

Being that wages and other asset prices were themselves all affected by the artificial boom via the misallocation of resources, in the Austrian view continuing the distortion via a monetary policy of sustaining asset prices causes more harm than good.

Additionally allowing inflation to cut wages ends up, again in the Austrian view is actually creating more problems in the economy by aggravating unemployment and wage declines in the face of this inflationary scenario where wages are allowed to fall as a matter of monetary policy, asset prices are sustained or allowed to rise, and the money supply is increased as again a matter of monetary policy.

Hence in the Austrian perspective from what I know it states that while wages should be allowed to fall as a correction to the distortion created by the artificial boom, most importantly other asset prices in the marketplace should be also be allowed to fall and correct themselves in order to the clear out the distortion of their prices created by the boom. Thus in the end the Austrian view states that the faster the fall of both wages and asset prices occur in the economy the quicker you'll see a economic recovery once both wages and asset prices reach their real market levels for sustainability and eventual setup a scenario of growth.

However the Keynesian view however is that non-wage asset prices should be propped up by monetary policy via inflation, real money wages should not be cut directly but instead eroded via indirectly via inflation and unemployment treated by an expansion of government spending while continuing the same monetary and interest rate policy that created the previous boom. Which in the view of the Austrian camp inevitably ends up to creating another artificial boom follow by a inevitable bust.

The degree and nature of the next bust itself is determined by the degree and nature of the artificial boom created which proceeds it. In other words the bigger the boom the larger the bust and if government and central banks attempt to advert said bust or reduce it affects it just prolongs the misery for everyone and creates more issues in the economy, i.e. 1970's stagflation or today's anemic job growth dominated by minimum wage and temporary/part-time jobs, etc.


IMHO from what I've read and understand personally on the matter instead of advocating for a minimum wage hike, will inevitably still lead to it being eroded via inflation we should be demanding that asset prices not be propped up by inflationary monetary expansion and that the dollar should be allowed to strengthen.

Additionally even if you were to tie the minimum wage it into the CPI it would still be eroded by inflation if we continue the same monetary policies because the CPI is a statistical index that can and is manipulated to mask inflation, i.e. if there was no inflation occurring today we would not be having this discussion about creating "living wages" for bottom of the barrel jobs that anyone could fill because wages would be holding steady or increasing in regards to the value of the dollar and asset prices would not be climbing significantly faster than wages are able to keep up. But again this is my opinion on the matter.

It doesn't take a good understanding of economic theory to argue for general economic freedom. It's good for its own sake. People should be free to set the prices for their labor, and employers should be free to offer that price or not. Whether the results are good or bad, the least we can say is that it's the result of free people making free decisions.

 

[fskimospy]

It doesn't take a good understanding of economic theory to argue for general economic freedom. It's good for its own sake. People should be free to set the prices for their labor, and employers should be free to offer that price or not. Whether the results are good or bad, the least we can say is that it's the result of free people making free decisions.

But certainly you approve of government regulation of certain aspects of that, right? Should companies be allowed to employ child labor? Should we have minimum safety standards? Should people be able to be paid in company scrip? I would assume the answers to all of those things are no, so you would be willing to infringe on general economic freedom as well.

 

[Atreus21]

But certainly you approve of government regulation of certain aspects of that, right? Should companies be allowed to employ child labor? Should we have minimum safety standards? Should people be able to be paid in company scrip? I would assume the answers to all of those things are no, so you would be willing to infringe on general economic freedom as well.

I used the word general to emphasize that there are some exceptions. I have no issue with disallowing the use of indentured servants, debt prisons, child labor, and a host of other abuses.

Allowing people to freely negotiate the price of their labor is no abuse. Rather it's an abuse for third parties to restrict it according to their own standards of what is acceptable.

 

[Naeeldar]

It cost them more money to hire a baby sitter for the children, to get transportation to work, then it would for them to college government aid, and stay at home.

Here's a thought. Don't have children when not financially stable. This isn't exactly rocket science here. People making 100k a year even hold off on babies because they don't feel set financially for it.

 

[fskimospy]

I used the word general to emphasize that there are some exceptions. I have no issue with disallowing the use of indentured servants, debt prisons, child labor, and a host of other abuses.

Allowing people to freely negotiate the price of their labor is no abuse. Rather it's an abuse for third parties to restrict it according to their own standards of what is acceptable.

So you would support the repeal of provisions that prohibit paying workers in company scrip?

 

[chucky2]

Why would a company first account for their employee wages in real USD to care for tax purposes, insurance premiums, etc., and then convert to paying the employee in script? This would seem...an additional cost and complexity on the employer... How is the employer going to generate EOY tax forms for the employee based off script?

Chuck

 

[fskimospy]

Why would a company first account for their employee wages in real USD to care for tax purposes, insurance premiums, etc., and then convert to paying the employee in script? This would seem...an additional cost and complexity on the employer... How is the employer going to generate EOY tax forms for the employee based off script?

Chuck

Don't you worry about their tax compliance paperwork, if a company wants to work that way and pay people in wages that can only be used to buy goods at the company store you're fine with it, right?

 

[chucky2]

Don't you worry about their tax compliance paperwork, if a company wants to work that way and pay people in wages that can only be used to buy goods at the company store you're fine with it, right?

Actually, I am. I don't know who would be dumb enough to do that, but, if they are, so be it. Who exactly would actually freely of their own free will sign up to get paid in script? Or, more specifically, who would be dumb enough to sign up to get paid in script they couldn't freely and easily convert, for no fee, into USD?

I know this scheme worked back in the day, but really, who would be dumb enough now to freely sign up for that job?

Chuck

 

[fskimospy]

Actually, I am. I don't know who would be dumb enough to do that, but, if they are, so be it. Who exactly would actually freely of their own free will sign up to get paid in script? Or, more specifically, who would be dumb enough to sign up to get paid in script they couldn't freely and easily convert, for no fee, into USD?

I know this scheme worked back in the day, but really, who would be dumb enough now to freely sign up for that job?

Chuck

What if you're on an oil rig in the middle of the ocean for months at a time? What if you're logging in the backwoods of Alaska? Ask yourself why people accepted it back in the day: because they didn't have other options. The idea that people couldn't find themselves without options today is awfully naive.

Some of this pressure to accept such wages has in fact been alleviated by the social safety net, but that's hardly a reason to support such behavior.

EDIT: ATPN is refreshing sometimes though, I have to say you would be hard pressed even on the lunatic fringe of the internet to find people who want to repeal laws that prohibited payment through company scrip. Not here though!

EDIT 2!: I just found out that as recently as 2008 Wal-Mart in Mexico was paying its employees with company scrip.