Minimum wage discussion

[SMOGZINN]

As a group, they may not be true; for an individual, if they can get their educational level above normal, they have the opportunity to increase their skill level, which will being up their wage.

It is the first ones in that have the chance for the most gains

And when we are talking to an individual 'get more education' might be a reasonable advice, but when we are talking about the economic police for a nation, 'get more education' is not.

Now you're talking from a scarcity mentality. This mentality goes there is only so much to go around, and I better get it before someone else does. IMO, that's a very negative mindset that can hinder your chances at success. Why not root for someone else's success knowing full well that if I worked just as hard I can also be successful as well.

No, I'm talking about supply and demand. Business pay you for work, but how much they pay you is based on how hard it is for them to get. If everyone had a Doctorate then Doctors would get minimum wage. Increasing supply does not magically increase demand.

This is not a problem of individuals.

 

[cabri]

And when we are talking to an individual 'get more education' might be a reasonable advice, but when we are talking about the economic police for a nation, 'get more education' is not.

The group will go no where until an individual is able to demonstrate that one can distinguish themselves from the group.

And the herd mentality is such (for most groups) that there is safety in numbers.

So those that break free are many times ostracized by the group leaders; who themselves are unable to move upward.

 

[SMOGZINN]

The group will go no where until an individual is able to demonstrate that one can distinguish themselves from the group.

And the herd mentality is such (for most groups) that there is safety in numbers.

So those that break free are many times ostracized by the group leaders; who themselves are unable to move upward.

Am I not saying this right? We are not talking about raising the upper middle wage, or even the middle wage, but the minimum wage. This is by default the wage that those that will not or can not distinguish themselves get. You can't argue that 'well if they weren't so average at their job they would get more' when by definition most people are going to be average.

 

[realibrad]

I did a quick search for that number, so I'm willing to accept that number might not be accurate, but that number is not terribly wrong either. Even if we are talking about $12 an hour my point is still the same.

My argument is that salary is basicly a curve distribution, weighted heavily on the lower end. No matter how much education you give the public somewhere around a quarter of all people will still be at that minimum wage line. Telling people to get an education is not a fix for poverty.

Salary can be measured on a curve distribution, but it is not a curve distribution. I know that sounds conflicting, but its not.

Wages are not really arbitrary. If a shop owner needs someone to clean floors, and he is making a profit of 20/hr on his store, he can't hire someone to clean the floors for above 20/hr because eventually his business would run out of money and close. Everyone in theory should be making less money than the value of their labor. This is not exploitation but necessary because of simple math.

Now, in reality people do make above their value. But the vast majority do not. Your argument is really that the gap between the value people bring with their labor and the amount they are paid is too large. I hope you are not arguing that people should make more than the value you bring, so I am going to continue from this idea.

So, back to it being measured vs being. When someone comes up with something new, be it a process or new technology, and the cost of producing goes down per unit output we see productivity increases. Resources being limited means that productivity increases means goods can now go to other uses. Productivity increases shift the curve to the right or even the left in terms of salary.

If the salary curve is a measure of all incomes and where they are going, then a shift in the curve to the right means there is more wealth. Those who are more productive than others will likely make more money. If education increased productivity, and everyone gained equally then the % change would be 0 relative to an increase or decrease, but the curve would shift to the right aka the pie would expand. That would mean that society would be more efficient and we would have more things good and or bad.

Education does not inherently mean people will be more productive. There is a lot of correlation with income and many make arguments as to why, but it is not a cause of increased income. In reality, more knowledge for a person increases the likelihood they can find efficient solutions to problems that can lead to productivity increases.

So, relative to others there would not be an increase in wealth, but if you compared it to the past we would all be more wealthy and that is what we see today. Take a car from 20 years ago and compare it to a car of today that costs the same in nominal terms adjusted for inflation and you get a lot more. Do the same for home sizes and just about anything else and you will find we are more wealthy.

Many will try to disagree because they say that an average car today costs more relative to the average income thus cars cost more. That is an incorrect way of thinking of wealth though.

People have far more things and vastly more access to things at a low cost. Adjusted for inflation nominal wages might be down, but the costs of goods is even lower.

This has already gotten pretty long, so I will let others reply.

 

[Rebel_L]

Salary can be measured on a curve distribution, but it is not a curve distribution. I know that sounds conflicting, but its not.

Wages are not really arbitrary. If a shop owner needs someone to clean floors, and he is making a profit of 20/hr on his store, he can't hire someone to clean the floors for above 20/hr because eventually his business would run out of money and close. Everyone in theory should be making less money than the value of their labor. This is not exploitation but necessary because of simple math.

Now, in reality people do make above their value. But the vast majority do not. Your argument is really that the gap between the value people bring with their labor and the amount they are paid is too large. I hope you are not arguing that people should make more than the value you bring, so I am going to continue from this idea.

Supply/demand does have a huge impact on wages and many peoples wages are decided arbitrarily. Just because there is a maximum limit, like there is a minimum limit does not mean its not a distribution. The value that someone brings is not in reality something that you can measure for most jobs and other than perhaps people who earn based on commissions of some type a person's wage is not linked to their value.

So, back to it being measured vs being. When someone comes up with something new, be it a process or new technology, and the cost of producing goes down per unit output we see productivity increases. Resources being limited means that productivity increases means goods can now go to other uses. Productivity increases shift the curve to the right or even the left in terms of salary.

If the salary curve is a measure of all incomes and where they are going, then a shift in the curve to the right means there is more wealth. Those who are more productive than others will likely make more money. If education increased productivity, and everyone gained equally then the % change would be 0 relative to an increase or decrease, but the curve would shift to the right aka the pie would expand. That would mean that society would be more efficient and we would have more things good and or bad.

Education does not inherently mean people will be more productive. There is a lot of correlation with income and many make arguments as to why, but it is not a cause of increased income. In reality, more knowledge for a person increases the likelihood they can find efficient solutions to problems that can lead to productivity increases.

You are oversimplifying the impact of education. The reason there are so many arguments about the how of that correlation is because there is not one easy thing that accounts for it.

So, relative to others there would not be an increase in wealth, but if you compared it to the past we would all be more wealthy and that is what we see today. Take a car from 20 years ago and compare it to a car of today that costs the same in nominal terms adjusted for inflation and you get a lot more. Do the same for home sizes and just about anything else and you will find we are more wealthy.

Many will try to disagree because they say that an average car today costs more relative to the average income thus cars cost more. That is an incorrect way of thinking of wealth though.

People have far more things and vastly more access to things at a low cost. Adjusted for inflation nominal wages might be down, but the costs of goods is even lower.

This has already gotten pretty long, so I will let others reply.

As long as we are in a resource/goods limited world think of wealth not as the amount of things that you have, but rather that wealth represent your potential to get the things you wish. The amount of stuff we have that is on an increasing trend for everyone is part of our standard of living. Our wealth rather is the expression of our ability to compete with others for the scarcer goods, it always a relative measure compared to others. Honestly most measures like raised minimum wage and social programs have no impact on wealth, rather simply on trying to maintain a standard of living. In a sense wealth is very much such related to your ability to make your own choices, if for instance Bill Gates decided that what he really found fulfilling and enjoyed doing was making walking sticks by hand carving them he could pursue that full time with little to no impact on his life, for most people that would not be an option without serious impact on their standard of living.

If all the wages in the world has a fixed maximum then setting a higher minimum wage decreases the maximum wage anyone can earn and that is exactly the point. When there is talk about a huge minimum wage increase it is simply a recognition that wealth is something that can actually only be gathered if you are earning more than your standard of living costs to maintain. The middle class hardly accumulates wealth anymore, sure they maintain a higher standard of living than many, but the majority of their savings are designated for things like retirement, the wealth you accumulate in your lifetime is what is left over when you are finished. My parents generation who are now well into retirement saved to have assets that would support a more or less indefinite retirement, the people at my work now that are approaching retirement have mostly given up on that and are planning on generally having used up all assets by the time they die.

 

[realibrad]

Supply/demand does have a huge impact on wages and many peoples wages are decided arbitrarily. Just because there is a maximum limit, like there is a minimum limit does not mean its not a distribution.

I am not sure what you mean there.

The value that someone brings is not in reality something that you can measure for most jobs and other than perhaps people who earn based on commissions of some type a person's wage is not linked to their value.

This is not true. Many companies find ways to measure the value a position brings. It may not be easy, but its doable. An example would be to measure the output of a department, and the expected output if you were to add another person. The difference is the value of the job added. You work that up through the system and you can then calculate the value. It gets much more complex, but its done by many. Sometimes people are wrong and sometimes its arbitrary, but not always and I would disagree that its typically wrong.

You are oversimplifying the impact of education. The reason there are so many arguments about the how of that correlation is because there is not one easy thing that accounts for it.

I simplified because it would be far to long to go into all the details in a forum thread. My point was that increasing everyone's skills and knowledge would not mean wealth would stay flat.

As long as we are in a resource/goods limited world think of wealth not as the amount of things that you have, but rather that wealth represent your potential to get the things you wish.

No. In economics wealth is not defined that way.
Economics.
all things that have a monetary or exchange value.
anything that has utility and is capable of being appropriated or exchanged.

The only relative part about wealth is the value in exchange. A new cell phone is worth more the day it comes out vs 2 years after. The value of that phone has gone done, and as it pertains to someones wealth, it would decrease. That is where the 2nd part of the definition comes in. The cell phone still has utility. If the old phone can do all of the things the new phone can but it has a lesser dollar amount, it still represents utility value. The poor of today are far more wealthy than ever. This is because they they have far more utility than ever before. Its true that the wealthy have more access to utility maximizers but the fact is that everyone is more wealthy than before.

The amount of stuff we have that is on an increasing trend for everyone is part of our standard of living. Our wealth rather is the expression of our ability to compete with others for the scarcer goods, it always a relative measure compared to others. Honestly most measures like raised minimum wage and social programs have no impact on wealth, rather simply on trying to maintain a standard of living. In a sense wealth is very much such related to your ability to make your own choices, if for instance Bill Gates decided that what he really found fulfilling and enjoyed doing was making walking sticks by hand carving them he could pursue that full time with little to no impact on his life, for most people that would not be an option without serious impact on their standard of living.

There really is not much worth responding to here. Wealth is not what you say it is. Its not about our ability to compete. Bill Gates could do that because he has enough wealth saved to not worry about money.

If all the wages in the world has a fixed maximum then setting a higher minimum wage decreases the maximum wage anyone can earn and that is exactly the point. When there is talk about a huge minimum wage increase it is simply a recognition that wealth is something that can actually only be gathered if you are earning more than your standard of living costs to maintain. The middle class hardly accumulates wealth anymore, sure they maintain a higher standard of living than many, but the majority of their savings are designated for things like retirement, the wealth you accumulate in your lifetime is what is left over when you are finished. My parents generation who are now well into retirement saved to have assets that would support a more or less indefinite retirement, the people at my work now that are approaching retirement have mostly given up on that and are planning on generally having used up all assets by the time they die.

People spend their wealth. I explained this by pointing out the types of purchases we make. We buy bigger cars and homes. The average home size is far greater than it was 50 years ago. The reason for this is because the average person buys bigger and better things. If the average person were to have the same standards we had 50 years ago, they would have a lot more money saved up.

 

[alcoholbob]

This talk about minimum wage increases has gotten me a bit peeved.

Have anyone heard of Jim Rohn? He had an excellent quote in the 1980s concerning wages.

Develop the skills that will increase your value in the marketplace. This will in-turn increase the amount you are paid.

That's advice for an individual to pursue higher wages individually, but that's a zero sum game that has no effect on average wage levels nationally. National productivity is mostly a function of capital investment and regulatory burden. If everyone in the country gets a PHD all that does is drive down the wages of PHDs, in no way does that increase national productivity or the average wage rate. If anything your national output will go down if everyone ends up being paper pushers and no nobody produces anything.

To give you a good example, let's take the United States. In the early 1990s 20-25% of the workforce was in manufacturing, and a typical house might be $150,000 and your average worker might make $45,000. Now everyone is fighting to go to college, and you send 60,000 factories overseas and all those "low skill labor jobs". The same house is now $500,000, but the average worker is still making $45,000, and now 4% of your workforce is in manufacturing. Now even though far more people are getting into higher education today than in the 1990s (and consequently bidding up the price of education), you can see wages and prices are perfectly tracking the decline in production in the United States. Thus acquring education and skills might be a great micro (individual) advice, but isn't a macro (system wide) solution to improving wages.

 

[realibrad]

That's advice for an individual to pursue higher wages individually, but that's a zero sum game that has no effect on average wage levels nationally. National productivity is mostly a function of capital investment and regulatory burden. If everyone in the country gets a PHD all that does is drive down the wages of PHDs, in no way does that increase national productivity or the average wage rate. If anything your national output will go down if everyone ends up being paper pushers and no nobody produces anything.

I responded to this argument, but I will do it again. First I will start with the idea that if everyone got a PHD that people would not make more is missing the point of an education.

If the point of an education is to give you more skills and knowledge, then you would likely become more productive. If you are more productive you create more wealth. Wages are supposed to be a representation of the wealth you are creating. If you are creating more wealth, you get more income aka higher wages because a flat % of a bigger pie would mean more nominal income.

You seem to be stuck on this idea that there is a limited amount of dollars to go around and everyone gets a sliver of that pie. The pie is in constant flux. It grows and shrinks all the time. Think of it like this. More productive workers increases the size of the pie. Wages being a % of the pie could remain the same, and everyone receive more wealth. In theory you could increase the size of the pie by 50% and reduce the distribution as a % by 1% on the lower brackets, and they would still earn more.

I will grant you that my explanation is very simple and the world is very complex, but the idea that the wages are a zero sum game is very wrong.

To give you a good example, let's take the United States. In the early 1990s 20-25% of the workforce was in manufacturing, and a typical house might be $150,000 and your average worker might make $45,000. Now everyone is fighting to go to college, and you send 60,000 factories overseas and all those "low skill labor jobs". The same house is now $500,000, but the average worker is still making $45,000, and now 4% of your workforce is in manufacturing. Now even though far more people are getting into higher education today than in the 1990s (and consequently bidding up the price of education), you can see wages and prices are perfectly tracking the decline in production in the United States. Thus acquring education and skills might be a great micro (individual) advice, but isn't a macro (system wide) solution to improving wages.

Your example is horrific. The median house is under $200,000. Home prices have not gone up 3.4X in the same time period.

The 50th percentile has been pretty close to flat, but not really flat. The bigger issue is how much of our income we spend. That is because if wages are flat, but the price of goods/services goes down, you are better off. Many will then look at the cost of a car from the 60s and the cost of a car today and say that shows that people make less in real dollars because the average car today costs more relative to average income. I already explained this as well. The car from the 60s was a simple pile of crap compared to the cars of today. You get AC, electric and power everything, better MPH and a whole list of other things.

As you can see, the US is not decreasing in production either. The US still produces more things than any other country.

You have a lot of assumptions and they are wrong.

 

[alcoholbob]

I responded to this argument, but I will do it again. First I will start with the idea that if everyone got a PHD that people would not make more is missing the point of an education.

If the point of an education is to give you more skills and knowledge, then you would likely become more productive. If you are more productive you create more wealth. Wages are supposed to be a representation of the wealth you are creating. If you are creating more wealth, you get more income aka higher wages because a flat % of a bigger pie would mean more nominal income.

You seem to be stuck on this idea that there is a limited amount of dollars to go around and everyone gets a sliver of that pie. The pie is in constant flux. It grows and shrinks all the time. Think of it like this. More productive workers increases the size of the pie. Wages being a % of the pie could remain the same, and everyone receive more wealth. In theory you could increase the size of the pie by 50% and reduce the distribution as a % by 1% on the lower brackets, and they would still earn more.

I will grant you that my explanation is very simple and the world is very complex, but the idea that the wages are a zero sum game is very wrong.





Your example is horrific. The median house is under $200,000. Home prices have not gone up 3.4X in the same time period.

The 50th percentile has been pretty close to flat, but not really flat. The bigger issue is how much of our income we spend. That is because if wages are flat, but the price of goods/services goes down, you are better off. Many will then look at the cost of a car from the 60s and the cost of a car today and say that shows that people make less in real dollars because the average car today costs more relative to average income. I already explained this as well. The car from the 60s was a simple pile of crap compared to the cars of today. You get AC, electric and power everything, better MPH and a whole list of other things.

As you can see, the US is not decreasing in production either. The US still produces more things than any other country.

You have a lot of assumptions and they are wrong.

Just call a difference in opinion. I believe you have s to produce more goods and services for more wealth. You believe everyone becoming PHDs and drawing graphs in an office while buying imported goods is wealth, of course, without understanding the role of the dollar in international affairs allows such a situation. Germany and Japan for example operate without the privilege of reserve currency status and have had to maintain 20-30% of their workforce in manufacturing to maintain their living standards.

As far as your graph goes, it only proves my point. In the timeline of your graph the number of Americans of working age has increased by about 30%, yet "production"--which now includes mere assembly of goods manufactured overseas--has only increased about 18%. This is a 10% decline in worker productivity despite your reasoning would imply America would be much more productive today since the average education level is much higher than in 1990.

 

[realibrad]

Just call a difference in opinion. I believe you have s to produce more goods and services for more wealth. You believe everyone becoming PHDs and drawing graphs in an office while buying imported goods is wealth, of course, without understanding the role of the dollar in international affairs allows such a situation. Germany and Japan for example operate without the privilege of reserve currency status and have had to maintain 20-30% of their workforce in manufacturing to maintain their living standards.

As far as your graph goes, it only proves my point. In the timeline of your graph the number of Americans of working age has increased by about 30%, yet "production"--which now includes mere assembly of goods manufactured overseas--has only increased about 18%. This is a 10% decline in worker productivity despite your reasoning would imply America would be much more productive today since the average education level is much higher than in 1990.

Please do not straw man me. If the point of an education is to give people skills and knowledge then it follows that they would increase their productivity. There are diminishing returns surely, but it is logical that skills and knowledge would help make people more productive.

As for your continued claim that worker productivity is down, you are still wrong.

You clearly do not know what you are talking about, so I am not going to do too much more work here. You are making claims that are not supported by data. If you think the loss in manufacturing jobs is what hurt the middle class, then you likelydo not know enough about the subject to really have an enjoyable discussion.

Support any of your claims and I will be glad to counter them.

 

[sm625]

Such graphs are completely meaningless because they do not take into account the labor and cost involved in making the tools modern manufacturing employees use in production compared to even just 40 years ago. If I replace a 100 man assembly line with a 10 man assembly line where each man is operating a giant machine that cost $12 million, I cant just claim with a straight face that I increased productivity by 10 fold. To do so would be to completely ignore all the thousands of man hours that went into the design and production of those machines.

 

[alcoholbob]

Ah yes, manufacturing output in dollars. If you were going to show how Americans are getting more productive you would show manufacturing physical output increases over time in tons of steel, concrete, durable goods, and productivity increases would also show in our balance of trade. But these obvious facts can't be shown obviously, which is why we both know why you posted a graph of manufacturing output in dollars, which doesn't differentiate between price increases or actual increases in output.

 

[realibrad]

Such graphs are completely meaningless because they do not take into account the labor and cost involved in making the tools modern manufacturing employees use in production compared to even just 40 years ago. If I replace a 100 man assembly line with a 10 man assembly line where each man is operating a giant machine that cost $12 million, I cant just claim with a straight face that I increased productivity by 10 fold. To do so would be to completely ignore all the thousands of man hours that went into the design and production of those machines.

Please put the graph in the context of the post it was replying to.

yet "production"--which now includes mere assembly of goods manufactured overseas--has only increased about 18%.

He clearly tried to say something that was not true. The graph shows that production is up well beyond his claim. You are right in that capital costs should be looked at if you are going to look at productivity and efficiency, but that was not the claim he made.

 

[realibrad]

Ah yes, manufacturing output in dollars. If you were going to show how Americans are getting more productive you would show manufacturing physical output increases over time in tons of steel, concrete, durable goods, and productivity increases would also show in our balance of trade. But these obvious facts can't be shown obviously, which is why we both know why you posted a graph of manufacturing output in dollars, which doesn't differentiate between price increases or actual increases in output.

Money is a representation of the value of goods/services. It is a well established practice for economists to use dollars to represent value as that is the purpose of money.

Also, the reason why you would not measure a single good is because the value of that good to society can change. If you were to look at gasoline pre 1900's, then gas per gallon was useless. If you were to measure its value to the word in 1950 it would be very different. You measure the total GDP as best as you can to show productivity because that is the best way to do it. Please do not imply that using dollars is a bad way when it is not. If you think it is, then you do not understand what money is and you should learn it before you make claims.

 

[Rebel_L]

I am not sure what you mean there.



This is not true. Many companies find ways to measure the value a position brings. It may not be easy, but its doable. An example would be to measure the output of a department, and the expected output if you were to add another person. The difference is the value of the job added. You work that up through the system and you can then calculate the value. It gets much more complex, but its done by many. Sometimes people are wrong and sometimes its arbitrary, but not always and I would disagree that its typically wrong.

I realize I was not clear on what I said here, I just figured in light of the later parts of the post you would understand that I am not talking the kind of value determination that you are. Value is a relative term that depends very highly on perspective. To the man drowning in a lake the value of a cup of water is nothing, yet to the person dying of thirst it is worth his life. The value of the work a person does can be looked at from several different perspectives, some of the ones that I think are important are the personal perspective, ie from the workers perspective, another is the companies perspective (that's the one your focused on) and another one is the perspective of society at large. They can all yield different results yet still be correct.

I simplified because it would be far to long to go into all the details in a forum thread. My point was that increasing everyone's skills and knowledge would not mean wealth would stay flat.


No. In economics wealth is not defined that way.
Economics.
all things that have a monetary or exchange value.
anything that has utility and is capable of being appropriated or exchanged.

The only relative part about wealth is the value in exchange. A new cell phone is worth more the day it comes out vs 2 years after. The value of that phone has gone done, and as it pertains to someones wealth, it would decrease. That is where the 2nd part of the definition comes in. The cell phone still has utility. If the old phone can do all of the things the new phone can but it has a lesser dollar amount, it still represents utility value. The poor of today are far more wealthy than ever. This is because they they have far more utility than ever before. Its true that the wealthy have more access to utility maximizers but the fact is that everyone is more wealthy than before.



There really is not much worth responding to here. Wealth is not what you say it is. Its not about our ability to compete. Bill Gates could do that because he has enough wealth saved to not worry about money.



People spend their wealth. I explained this by pointing out the types of purchases we make. We buy bigger cars and homes. The average home size is far greater than it was 50 years ago. The reason for this is because the average person buys bigger and better things. If the average person were to have the same standards we had 50 years ago, they would have a lot more money saved up.

When we are talking about making a minimum wage adjustment we are talking about a distribution change, a zero sum scenario, or whatever you want to call it. We are not creating more value, we are just assigning more to certain people, the pie is static in that moment and we are giving some people more... it means other people get less.

You seem to think people acquiring more skills the solution to problem, yet ignore that simply acquiring new skills does create wealth for that person. Wealth creation (especially the kind using specialized skills) is generally not done alone, it requires help and cooperation. You need to acquire not just any skills, you need to acquire the right ones, and acquiring the wrong ones can leave you with the cost in time and resources of the training with no added benefit. Just because you can now do something new and potentially more valuable does not mean you get to do it. As alcoholbob pointed out most wealth creating activities require some capital investment and without extra capital investment in for instance the equipment required for you to use your new skills all you end up doing is adding to the pool of people competing for the use of the existing equipment.

You also tell me that wealth is anything that can be exchanged, that things can gain and loose value with a supply and demand scenario and then claim that the value of my things is in no way dependent on the value of your things. That you don't see a contradiction in what you said surprises me. It seems to me that you are unable to view what anyone says from other than a corporate perspective. The economic system exists not to serve itself, but rather to serve society, it must therefore adjust to the goals and values of society and not try to tell society what its goals and values should be.

 

[realibrad]

I realize I was not clear on what I said here, I just figured in light of the later parts of the post you would understand that I am not talking the kind of value determination that you are. Value is a relative term that depends very highly on perspective. To the man drowning in a lake the value of a cup of water is nothing, yet to the person dying of thirst it is worth his life. The value of the work a person does can be looked at from several different perspectives, some of the ones that I think are important are the personal perspective, ie from the workers perspective, another is the companies perspective (that's the one your focused on) and another one is the perspective of society at large. They can all yield different results yet still be correct.

Personal value is personal. We agree there. Utility is something different.

When we are talking about making a minimum wage adjustment we are talking about a distribution change, a zero sum scenario, or whatever you want to call it. We are not creating more value, we are just assigning more to certain people, the pie is static in that moment and we are giving some people more... it means other people get less.

Many would say that redistribution of wealth would lead some people to work less on the margins. That is likely true, but its not a big factor in why minimum wage is bad. The issue is not only that I don't want to take people's money. I also think it makes low productivity jobs too expensive to have.

College has become way to expensive. I wont go into why, but it has made it to where many will not get the return they expect. What I worry about are the poor people who could have gotten a job and worked their way up. Talk to anyone who is older and they will tell you it used to be very common to find a low wage job and work your way up. That has now been taken away because small firms cannot afford minimum wage. Many see this is a good thing, because a low wage job is "exploitation". That is incorrect.

If a small shop owner wants to give a local teen a job to give him a few extra bucks, he can't if the kids labor is not worth more than minimum wage. That kid could have gotten job skills and used that to get a better job. Then use that job to get an even better job. I am not a college grad and this is what I am doing.

I come from a very poor background where my mother was on welfare and I did not have my first computer until I was in 10th grade and even then we had dial up. Last year I purchased my house, and a few years before that paid off my car that I purchased new. I was lucky because I was always pretty smart and was able to find work easy.

The point is that you are taking away job opportunities for people that may not be college material, or simply not want college from starting in the work force.

I should day that I am a big Milton Friedman fan so a negative income tax would seem to work far better than minimum wage.

You seem to think people acquiring more skills the solution to problem, yet ignore that simply acquiring new skills does create wealth for that person. Wealth creation (especially the kind using specialized skills) is generally not done alone, it requires help and cooperation. You need to acquire not just any skills, you need to acquire the right ones, and acquiring the wrong ones can leave you with the cost in time and resources of the training with no added benefit. Just because you can now do something new and potentially more valuable does not mean you get to do it. As alcoholbob pointed out most wealth creating activities require some capital investment and without extra capital investment in for instance the equipment required for you to use your new skills all you end up doing is adding to the pool of people competing for the use of the existing equipment.

We would probably disagree on what the "problem" is. I think a huge issue is the fact that way too many resources are pushing people into college. People get burdened with large debts and skills that will not paid them back any time soon.

I also agree that far too much money goes to some people, but not likely the people you would choose. I don't believe in monopolies for public good, because to me that does not work. I think people should be able to make as much money as they can, so long as its willing by all parties.

I would much rather a society that provides people far more goods and a higher standard of living vs people that have more money and less things in the world.

You also tell me that wealth is anything that can be exchanged, that things can gain and loose value with a supply and demand scenario and then claim that the value of my things is in no way dependent on the value of your things. That you don't see a contradiction in what you said surprises me.

I did not say what you are claiming, so I do not see a contradiction in what I said. Re-read what I said about wealth being multifaceted. Wealth is also a function of utility.

It seems to me that you are unable to view what anyone says from other than a corporate perspective.

I am guessing you now assume I am a republican or a conservative because you are saying I am for corporations. I am not. Corporations are not people. Corporations are benevolent. Corporations do not feel or think. People run things. Why you made your statement is confusing to me, so please explain.

The economic system exists not to serve itself, but rather to serve society, it must therefore adjust to the goals and values of society and not try to tell society what its goals and values should be.

The economy is the term we give to a complex set of interactions. It is not meant to do anything. It is neither good or bad. People serve each other, not economies. This is not semantics.

Also, if you want an economy that is run by society, then open it up to the free market. And, before you go on about corruption, understand that all systems have corruption, its just that the free market has less.

I should also point out that the free market is not letting someone do what ever they want to people that are not strong enough to stop it.

 

[SMOGZINN]

If the point of an education is to give you more skills and knowledge, then you would likely become more productive. If you are more productive you create more wealth. Wages are supposed to be a representation of the wealth you are creating. If you are creating more wealth, you get more income aka higher wages because a flat % of a bigger pie would mean more nominal income.

That has not been true for a while now. A person is not paid based on how much wealth he can create. A person is paid the minimum possible to attain his wealth production. Since most people's skill sets are incapable of producing wealth directly, and is only really useful in a larger organization, they are not able to directly leverage their ability to generate wealth. That means they have to negotiate to get their fair share of their productivity out of the organization. So, a person's wages is more closely tied to their ability to negotiate than their ability to generate wealth. That means that it is not your productivity that is important, but how rare the specific form of productivity that you can offer is. The more common it is, the lower your ability to successfully negotiate a fair wage.

 

[realibrad]

That has not been true for a while now. A person is not paid based on how much wealth he can create. A person is paid the minimum possible to attain his wealth production. Since most people's skill sets are incapable of producing wealth directly, and is only really useful in a larger organization, they are not able to directly leverage their ability to generate wealth. That means they have to negotiate to get their fair share of their productivity out of the organization. So, a person's wages is more closely tied to their ability to negotiate than their ability to generate wealth. That means that it is not your productivity that is important, but how rare the specific form of productivity that you can offer is. The more common it is, the lower your ability to successfully negotiate a fair wage.

I think you need to nail down how you define wealth.

I have no doubt that there are people who make more than their value added. There are also people who are not doing the most productive thing that they could in terms of employment. Einstein used to work as a patent clerk. The wage he made was low as the value to society was low. When he started coming out with amazing theories his work became far more valuable to society. Many people are doing things that are not as valuable as other things they could be doing.

I don't doubt that negotiation help drive wages, but I would totally disagree that its more important then the value they bring to a company or the position.

As for your claims about people not being able to leverage their skills for wages, I am not sure where you get the data to back that up. Its not logic either as far as I can tell. Maybe you meant to say that productive skills cannot be leveraged to increase wages? Obviously the skill of negotiation is able to drive up wages, but I don't think you believe its the only skill.

You have made a lot of claims and then built your logic off of the assumptions to come to your conclusions. You are speaking as if its factual rather than opinion.

 

[heymrdj]

The truth is, in my city, you'll go to college a minimum of 2 years before we'll hire you. You'll at least have an associates degree. Once you have that (and since you most likely had 0 aid since you're an adult that went back to college to get more opportunities) debt, we'll make you an offer for 22-24K per year salary, full time. Enjoy paying off 20K in debt at 20$ per month.

 

[Rebel_L]

Personal value is personal. We agree there. Utility is something different.

As far as terminology goes you are going to have to explain your terms for me in more detail, I generally deal with economic topics on a more conceptual basis and with people of too many varied backgrounds that the specific economic language you use is not something I am very familiar with. Google tells me that economically utility is "usefulness" and while I will agree that usefulness is different from value the two are related enough that the distinction is not necessary for the discussion we are having and so I use the general and more broadly understood term value.

Many would say that redistribution of wealth would lead some people to work less on the margins. That is likely true, but its not a big factor in why minimum wage is bad. The issue is not only that I don't want to take people's money. I also think it makes low productivity jobs too expensive to have.

College has become way to expensive. I wont go into why, but it has made it to where many will not get the return they expect. What I worry about are the poor people who could have gotten a job and worked their way up. Talk to anyone who is older and they will tell you it used to be very common to find a low wage job and work your way up. That has now been taken away because small firms cannot afford minimum wage. Many see this is a good thing, because a low wage job is "exploitation". That is incorrect.

If a small shop owner wants to give a local teen a job to give him a few extra bucks, he can't if the kids labor is not worth more than minimum wage. That kid could have gotten job skills and used that to get a better job. Then use that job to get an even better job. I am not a college grad and this is what I am doing.

I come from a very poor background where my mother was on welfare and I did not have my first computer until I was in 10th grade and even then we had dial up. Last year I purchased my house, and a few years before that paid off my car that I purchased new. I was lucky because I was always pretty smart and was able to find work easy.

The point is that you are taking away job opportunities for people that may not be college material, or simply not want college from starting in the work force.

I should day that I am a big Milton Friedman fan so a negative income tax would seem to work far better than minimum wage.



We would probably disagree on what the "problem" is. I think a huge issue is the fact that way too many resources are pushing people into college. People get burdened with large debts and skills that will not paid them back any time soon.

I also agree that far too much money goes to some people, but not likely the people you would choose. I don't believe in monopolies for public good, because to me that does not work. I think people should be able to make as much money as they can, so long as its willing by all parties.

I would much rather a society that provides people far more goods and a higher standard of living vs people that have more money and less things in the world.



I did not say what you are claiming, so I do not see a contradiction in what I said. Re-read what I said about wealth being multifaceted. Wealth is also a function of utility.



I am guessing you now assume I am a republican or a conservative because you are saying I am for corporations. I am not. Corporations are not people. Corporations are benevolent. Corporations do not feel or think. People run things. Why you made your statement is confusing to me, so please explain.



The economy is the term we give to a complex set of interactions. It is not meant to do anything. It is neither good or bad. People serve each other, not economies. This is not semantics.

Also, if you want an economy that is run by society, then open it up to the free market. And, before you go on about corruption, understand that all systems have corruption, its just that the free market has less.

I should also point out that the free market is not letting someone do what ever they want to people that are not strong enough to stop it.

Let me start with the last part first and then move there. Economy is a neutral term like you say. An economic system is the rules by which we go about participating in the economy. A set of rules contains within it a set of values. Actions that are not allowed are considered bad, actions specifically allowed good, and actions not specified are generally permissible or good until deemed otherwise by the body that controls/regulates the rules (often the general direction of the rules gives hints to actions not specified, but unless obvious we consider people acting on things not specified to have done nothing wrong)

What our economic system teaches us to be good and right is a large topic itself and we may even disagree here but I will just give a few things that I learned that I would say are things many people hold as something that our system promotes.

-wealth is good, more is better
-get as much as you can
-if you don't have enough, your doing something wrong


I believe in general that our economic system was designed to increase the overall wealth as quickly as possible. It lets you outcompete other systems and I think the thought was that any lack of wealth problem will simply fix itself as the system keeps generating more of it.

As a quick aside I am finding that I think I could write each paragraph to a few thousand words long if I wanted to cover the relevant details that I think would be important but I certainly don't have the time to even attempt such a thing. If something seems rushed or without enough information I can clarify, I'm trying to say too much it too small a space and it may come across a bit disjointed.

I commonly see people separate personal ethics system from business systems, phrases like "business is business". The US seems to be the most biggest hold out in terms of western first world countries in taking steps to align the two, Canada (where I am) not being that much different. The idea's of universal human rights and a belief that equality is good from a social perspective is what is most in conflict with our economic rules.

I see large wealth inequality as a problem in two directions. The more unequal the wealth between the easier it is for the wealthy one to take advantage of the poor one. If I can offer you nothing you truly need or want because all your needs and wants are taken care of you can demand a very high price for something that I believe I need and I will pay it. This results in unfair transactions and also leads to even more unfair transactions in the future. Secondly our obsession with growing the proverbial pie has some consequences that I believe makes it necessary slow down (think environmental impacts of our vast resource use, and that some important resources are being rather misused without regard to the future... the importance tend to be placed on immediate gain)

It also seems apparent that growing wealth in response to all problems is not a workable solution. In the end if you can not strictly rely on more wealth to fix the problems of people not having enough wealth, you have to start moving it around instead. Social programs, charities have existed for a long time now and are all efforts to redistribute wealth.

I see minimum wage increases as a incomplete redistribution solution, it does not control at all where the wealth comes from, only who its given too. This you rightly point out has problems. The strong point for minimum wage increases to me is that it addresses a very small level, but also very important human issue. Welfare programs and charity are considered by many people as a negative if they are on the receiving end, it represent to them that they are a failure. Minimum wage increases instead give them a larger reward for what they do giving them sense of dignity and contribution that ultimately leads them to more healthy well adjusted members of society.

I am not sure how I feel about monopolies... from a basic principle I believe that everything we deem to be a necessity should be distributed either for free or certainly at cost if for no other reason than to make people less vulnerable to exploitation. I am however not sure if the "pie" is currently large enough that we can actually do so, but that would align with my general values.

On specialized skills I am torn into many directions and I have no great answer lined up but I will just list the things that I believe to be important considerations. Undirected resource intensive special skill training without some sort of oversight or management of how much of each skill is required is wasteful. I also believe that many or most people do not know themselves well enough at the end of highschool to be able to correctly pick something they will enjoy/find fulfilling in the long run. Forcing people to specialize in something specific is bad. Waiting to long to train specialty skills is also inefficient.

As to my comments on your corporate thinking perspective it has nothing to do with what kind of political leaning you have or even that you think our economic system is great. I was trying to say that all your responses seem to be answered from a corporate owner point of view. Like you empathize with company owners easily, but you not very well with individual workers or government. I cant think of a better way to put it, but its not calling you a corporate shill or anything.

 

[kia75]

I think you need to nail down how you define wealth.

I have no doubt that there are people who make more than their value added. There are also people who are not doing the most productive thing that they could in terms of employment. Einstein used to work as a patent clerk. The wage he made was low as the value to society was low. When he started coming out with amazing theories his work became far more valuable to society. Many people are doing things that are not as valuable as other things they could be doing.

I'm glad you mentioned Einstein, because to say Einstein was worth a trillion dollars in created wealth would be an understatement. Einstein theories have created more wealth then Bill Gates, Steve Jobs, and the Koch Brothers. Computers wouldn't exist without Einstein. Yet at his death Einstein's net worth was only 1 million dollars (about 12 million adjusted for inflation.)

Einstein never got close to the amount of wealth he generated.

I don't doubt that negotiation help drive wages, but I would totally disagree that its more important then the value they bring to a company or the position.

Let's take Einstein, for example. We agree that he's created lots of wealth, correct? Do you think any university would be able to pay him his economic worth? What about any private business?

Now here's another question. Do you think people would be able to accurately predict Einstein's worth? Remember, without Einstein, computer's don't exist. Could someone from 1905 predict how important computers would be? Satellites?

You're assuming that employers know the value of their employees, employees know their value to their employers, and there aren't extenuating circumstances that keep a person from getting that value. It took decades to fully understand what Einstein was saying, and how useful it actually was.

As for your claims about people not being able to leverage their skills for wages, I am not sure where you get the data to back that up. Its not logic either as far as I can tell. Maybe you meant to say that productive skills cannot be leveraged to increase wages? Obviously the skill of negotiation is able to drive up wages, but I don't think you believe its the only skill.

Einstein was extremely smart. Completely smart. One of the smartest people ever to walk the earth. But he was infamously single-minded. He thought about Physics so much that he infamously would forget to wear pants. He devoted himself to his work so much that he was a bit of an odd ball. I'm pretty certain that if Einstein devoted himself more to social skills instead of physics then he could have gotten financial wages more equivalent to his worth. But if he did devote himself more to his social skills then his theories, do you think he would have been as prolific as he was?

You need negotiation skills and good people skills to get people to give you as much money as you can, but taking time to develop those skills results in less time to develop the skills you need to create value.

 

[sewwtjen17]

by considering time and the value need more than 30K per annum

 

[piasabird]

Lots of people work full time and it takes 2 people working to get by. This term Living Wage is some pie in the sky number. The cost of living is different everywhere. While I do think that the poor may deserve a raise, lets approach this incrementally. The bottom line seems to be how much are you willing to spend on your next Hamburger and fries Lunch. Cheeseburger and fries with a soda will cost $20. Is that OK with you?

 

[piasabird]

If we just changed the rules under Obama Care fast food workers could work more hours.

 

[SMOGZINN]

The bottom line seems to be how much are you willing to spend on your next Hamburger and fries Lunch. Cheeseburger and fries with a soda will cost $20. Is that OK with you?

You don't math much do you?