Question about the effect of Minimum wage law on emplyment

[Hugo Drax]

You're working under several assumptions that may not be necessarily correct:

1. The company would be able to absorb/pass on the costs, and not either go out of business or divest the canned soup product; thus making the can polisher job go away.

2. The company decides to keep the soup polisher position instead of automating it, or not bothering to polish cans anymore; thus making the can polisher job go away.

3. The company decides not to hire a second can polisher to increase their output to 200k cans daily; thus making an incremental polisher job go away.

4. After paying an additional $.00048/can for soup, extra $.06/burger, etc. for every product a consumer buys, it adds up to a significant amount and thus allowing the consumer to buy less soup or no soup at all; thus making the can polisher job go away.

That is the big question. Will Americans stop buying burgers at fast food restaurants if it costs 6 cents more for a meal than it did last year. Or will they still chose to purchase the product.

now those employees that have their wages doubled flipping burgers might buy two meals instead of one due to a doubling of wages.


Henry Ford's philosophy was to make sure his employees made a good enough wage so they can afford to buy his automobiles. (Model T)

Right now the Discrepancy between CEO/upper echelon pay and employee pay is massively out of whack in terms of historical averages.

What is keeping the economy rolling right now is massive borrowing to purchase goods and services(and government aid such as foodstamps,WIC,etc). The use of Debt by the average American is being used to make up the difference.

Walmart tells their employees to file for government benefits to make up for the shitty wages. Taxpayers are paying higher taxes so that the Government can subsidize Wal-Mart wages by proxy.


As long as the Punchbowl is available and everyone can keep borrowing, things will work. It is when the music stops and people are no longer able to borrow money where you will see the big issues today.


The long term smarter view is to make sure your customers make a good wage so they can support the economy and be able to purchase your goods and services. Unfortunately American industry only plans one quarter at a time.

 

[Matt1970]

Everyone thinks we can just keep jacking up the price of shit and people will just pay it. Our massive trade deficit proves otherwise. And you can try and explain to people that your burger costs more because you pay your workers more, they will just ignore you and go to the burger shop next door.

 

[Patranus]

This is my view on wages in the United States.

So I could hire a CGI artist to build a model of a sports car for $40 an hour and it may take them 100 hours to complete a model or $4,000 and have the model be 100% perfect when I get it back.

On the other hand I could hire 2 people in India at $10 an hour and it may take them both 75 hours or $1500 but the model may be 80% perfect needing another 50 hours of revisions or an addition $1,000.

So I can "brute force" work in India and while the quality may be lower than what I can get from the United States and getting to US quality will take more time, it is still cheaper.

More things could be done via "brute force" in the United States if the federal government relaxed hiring and wage requirements. This would be a benefit for everyone.

 

[lopri]

What's interesting is those who oppose to minimum wages also oppose to any kind of sensible immigration policies (or just hate any recent immigrants, legal status notwithstanding). At least minimum wage policies have some moral force behind it.

 

[nextJin]

Why not? Doesn't the struggle shape you and build your character? You want to populate the world with more assholes?

That aside, I'm quite sure there's even a point where your family would be comfortable and secure for generations given interest and investments of that wealth you made.

Why should you be the last one to work though?

Securing your families future does not mean you can't teach hard work ethics, responsibility, good judgment, etc (non liberal traits).

Do you have kids?

 

[s0me0nesmind1]

That is the big question. Will Americans stop buying burgers at fast food restaurants if it costs 6 cents more for a meal than it did last year. Or will they still chose to purchase the product.

now those employees that have their wages doubled flipping burgers might buy two meals instead of one due to a doubling of wages.


Henry Ford's philosophy was to make sure his employees made a good enough wage so they can afford to buy his automobiles. (Model T)

Right now the Discrepancy between CEO/upper echelon pay and employee pay is massively out of whack in terms of historical averages.

What is keeping the economy rolling right now is massive borrowing to purchase goods and services(and government aid such as foodstamps,WIC,etc). The use of Debt by the average American is being used to make up the difference.

Walmart tells their employees to file for government benefits to make up for the shitty wages. Taxpayers are paying higher taxes so that the Government can subsidize Wal-Mart wages by proxy.


As long as the Punchbowl is available and everyone can keep borrowing, things will work. It is when the music stops and people are no longer able to borrow money where you will see the big issues today.


The long term smarter view is to make sure your customers make a good wage so they can support the economy and be able to purchase your goods and services. Unfortunately American industry only plans one quarter at a time.

Your peanut sized brain still isn't thinking hard enough. I know it was a challenge to analyze the fry-cook accounting for a $0.06 cent difference in the burger price, but try to think a little harder.

What about the meat to obtain the burgers? Oh guess what, that went up $0.06 cent too... Those burgers didn't get slaughtered, cleaned, packed, frozen, and distributed for free.

What about the oils used to fry everything? OH guess what, that went up $0.06 cent too. Those oil companies have to pack and distribute those too.

What about the toppings? The buns? What about the napkins? The bags? The restroom cleaner's salary went up too, guess where that needs to be applied?

You liberals are REALLY having a hard time understanding when EagleKeeper says ripple effect. Apparently it's too big of a concept for you to understand which is mind blowing in of itself.

 

[jackstar7]

Securing your families future does not mean you can't teach hard work ethics, responsibility, good judgment, etc (non liberal traits).

Do you have kids?

You won't be teachin' nothing when you're dead and your kids' kids' kids' kids are just born to easy livin'.

And, since it doesn't actually matter, I'm not going to answer your question. Asking it tells me you've already assumed an answer.

 

[DucatiMonster696]

What's interesting is those who oppose to minimum wages also oppose to any kind of sensible immigration policies (or just hate any recent immigrants, legal status notwithstanding). At least minimum wage policies have some moral force behind it.

"Sensible"? You mean granting blanket amnesty is "sensible"? Because that is what you are talking about which would have an adverse effect of encouraging more illegals to enter the US and continue the same old, same old. Lastly minimum wage policies has no "moral force" when you create a price floor for labor which ends up creating a glut of labor in the marketplace.

 

[CitizenKain]

work ethics, responsibility, good judgment, etc (non liberal traits).

Surprised you could type that without the irony overwhelming you.

 

[lopri]

"Sensible"? You mean granting blanket amnesty is "sensible"? Because that is what you are talking about which would have an adverse effect of encouraging more illegals to enter the US and continue the same old, same old. Lastly minimum wage policies has no "moral force" when you create a price floor for labor which ends up creating a glut of labor in the marketplace.

Are you implying that illegal immigrants somehow profit from the minimum wage?

You can support getting rid of minimum wages and opening the job market on a principled basis. But it is not logically sound to support one but not the other. Often the inference of such a position is that something other than policy preferences is at work.

 

[Attic]

That is the big question. Will Americans stop buying burgers at fast food restaurants if it costs 6 cents more for a meal than it did last year. Or will they still chose to purchase the product.

now those employees that have their wages doubled flipping burgers might buy two meals instead of one due to a doubling of wages.


Henry Ford's philosophy was to make sure his employees made a good enough wage so they can afford to buy his automobiles. (Model T)

Right now the Discrepancy between CEO/upper echelon pay and employee pay is massively out of whack in terms of historical averages.

What is keeping the economy rolling right now is massive borrowing to purchase goods and services(and government aid such as foodstamps,WIC,etc). The use of Debt by the average American is being used to make up the difference.

Walmart tells their employees to file for government benefits to make up for the shitty wages. Taxpayers are paying higher taxes so that the Government can subsidize Wal-Mart wages by proxy.


As long as the Punchbowl is available and everyone can keep borrowing, things will work. It is when the music stops and people are no longer able to borrow money where you will see the big issues today.


The long term smarter view is to make sure your customers make a good wage so they can support the economy and be able to purchase your goods and services. Unfortunately American industry only plans one quarter at a time.

For the bolded I see this method used by liberal type minds often. Ah a burger will cost 6c more, big deal. On the singlular level it makes implicit sense, it's not a big deal. But the raise in costs would not be limited to a single burder on a fast food trip made once a week (I hope not more often). The raise in price would hit everything one buys on a daily basis on a day over day all the time everything level. Not just a single purchase level.

Reminds me of the half CENT increase in sales tax that CA did to it's populace. It's only a half cent, big deal, it's not biggie. It was a half percent increase in sales tax, sold under the same false logic you have used above. It was consistently paraded out on radio waves as a half cent increase in sales tax as if everyone would only have one dollar subject to the half percent sales tax increase as opposed to every single dollar they spent being subjected to it. I checked, it was every dollar I spent that got hit and it felt a lot more like a half percent increase in sales tax rather than a half CENT increase that the bureaucrats sold it as.

The rest of your post I agree with.

I generally believe the solution exists from either the Dems or Repubs taking a moment to stop being so full of shit on everything they speak on. If one side gave it up, it would expose the other side. As long as both sides are so egregiously full of crap, they both get away with the method. Ultimate result, as we clearly see, is a disturbing wealth gap that has grown over the past 10 years to a staggering degree, but one which has been growing for 30 years. The catch is that the power is in the people, not DC. Conservation is the answer, not more consumption. More consumption keeps the electric debt rod up the ass of everyone but the top 1% who are structured to skim money off everything anyone ever does by firmly holding that handle.

 

[Paul98]

I hate when I see the hypothetical arguments where both sides are making up their own scenario to support their ideas while being overly simple. None of this will convince anyone since these simple scenarios are far to easy to poke holes in. Same goes with the charts taken out of context or used without any information on why things happened.

You need to take real world examples with real world numbers, and analysis.

It is clear we have a problem in this country, what isn't clear is exactly how to fix the problems.

 

[simpletron]

Here is a more real world example. Your typical restaurant spends(as percentages of revenue) 30 to 40% on food, 30 to 40% on labor, and 20% on overhead(lease/mortgage/utilities). The better ran restaurants can push food and labor down to around 25% each, while poorly managed ones can have food exceed 50% and labor up to 50%.

So if minimum wage was to go up by 20%, what would happen to the typically restaurant above? Well, most of the labor makes below minimum(waiting staff) or close to minimum wage. It is likely that those making more than minimum will keep at least some, if not all of their edge to minimum wage(hiring/training people is expensive). So let's say that labor cost goes up by the full 20%, this corresponds to a 6 to 8% increase in meal price to maintain the same profits. Overhead costs aren't likely to change much(lease/mortgages terms don't change because of minimum wage, and utilities have a high fixed cost of infrastructure/fuel and low percentage of their cost is due to minimum wage workers). Since a 5% increase in overhead would corresponds to a 1% increase in meal price, let's call the meal price increase due to overhead as <1%. The food itself have lots of minimum wage(or near it) worker throughout harvesting, processing, and delivery to restaurant. Probably 25 to 50% of the final cost is due to minimum wage workers. This corresponds to a 5 to 10% increase in food prices and a 1.5% to 4% increase in meal prices. So adding it all up meal prices for the typically restaurant would need to 7.5 to 12% to maintain the same profitability due to a 20% increase in minimum wage.

I eat at a wendy's down the road roughly once every two weeks and order the same thing every time. When minimum wage increased by 13.5%, 12% and 10.5% in 2007 to 2009, the price of the meal jumped by 5 to 7% at the same time like clockwork. These increases roughly match the math above.

 

[diesbudt]

lets say you have the soup can polisher who makes 6 dollars an hour. now they double his wages to 12 dollars an hour.

He still polishes 100,000 soup cans a day (8 hour work day). but his wage went up 100%.

The cost of polishing each soup can goes up from .00048 cents a can to .00096 cents a can.
His salary was doubled but the cost of soup can polishing is insignificant to the end buyer.

Now to the CEO though, over millions of cans his salary might be impacted.


Same thing with burger flippers.

Lets say burger flipper flips 800 burgers a day. over an 8 hour day. wages 6 bucks an hour.

48/800 = his hourly wage contributes to 6 cents to the cost of the burger. Doubling his salary now contributes to 12 cents of the cost of a burger.

Does paying 6 cents a burger more mean the end of the world to Americans?

I think not.

But doubling the salary of a minimum wage employee trying to make ends meet, does it make a big difference. Shit yes.

Now The CEO though will not be happy since 6 cents over millions of burgers flipped will have an impact on his salary. He might only be able to make 90 million dollars a year instead of 180 million dollars a year.

Let us take your example with the can of soup.

First you are assuming only 1 person gets a raise. Not all minimum wage earners. Second you used 100,000 when in reality it is closer to 12 a minute (1 per 5 seconds) thus 5760 not 100,000 cans. (This assumes no breaks, or the breaks are added on "after 8" hours.)

Let us say there is 7-8 other steps along the way that can must cross. (Quality checker, label placer, so on so forth). Let us also use the factory standard of approx. 4-5% of the cans overall are scrapped due to issues along the way.

so a raise from $6-$12 for 1 person for 8 hours = can increase of $0.0083333 --> $0.0166666.

Now let us assume all things fair, the other 7 workers (total of 8) that have to spend 5 seconds on this can for their various jobs as well do so.

Now that one can has went up $0.133. Overall. Much higher than your fraction of a cent.


The primary thing (outside of ludicrous numbers) you did not add in your simple math, is that every time the produced object is moved to the next person, or is even touched (thus this person could have used time else where) by someone, it's cost goes up by the proportional fraction of how much that person makes.

So if something is touched by 14 minimum wage earners before going out the door, (in a big factory this is not a bad estimate) than any calculations you must make must be a factor of x14 as all their wages went up. Not just one. Then most companies will cut labor to offset the cost of the increase. Thus production may slow down, but the overall cost/revenue for the operation stayed the same.

 

[nextJin]

Surprised you could type that without the irony overwhelming you.

Should we take a survey of the top successful CEO's and Small Business owners and take another survey for poor people asking what their political ideology is?

You won't be teachin' nothing when you're dead and your kids' kids' kids' kids are just born to easy livin'.

And, since it doesn't actually matter, I'm not going to answer your question. Asking it tells me you've already assumed an answer.

I won't be sure, that doesn't mean my kids (whom I raised responsibly) wouldn't do the same. Those same kids could also donate all of it to charity for all we know. What matters is that I don't pamper them and give them everything in life. Teaching responsibility and work ethic has no bearing on how much money one has.

I did not assume anything, usually parents want what's best for their children and to be able to provide for them and give them things they never had (i.e. a better life). Is it safe to assume (yes I am now using that word) that if you won 500 million in the lottery you would give it all away to charity and tell your children "It's best for society, son. Other people need that money much more than you."

 

[jackstar7]

I won't be sure, that doesn't mean my kids (whom I raised responsibly) wouldn't do the same. Those same kids could also donate all of it to charity for all we know. What matters is that I don't pamper them and give them everything in life. Teaching responsibility and work ethic has no bearing on how much money one has.

I did not assume anything, usually parents want what's best for their children and to be able to provide for them and give them things they never had (i.e. a better life). Is it safe to assume (yes I am now using that word) that if you won 500 million in the lottery you would give it all away to charity and tell your children "It's best for society, son. Other people need that money much more than you."

I agree that modeling and teaching good behavior should have no ties to money, but I've seen how having it and lacking it can certainly affect what's modeled and taught beyond the obvious (like how one processes stress or handles setbacks).

I'm not sure why this hypothetical matters either. I don't play the lottery. But should I come upon incredible fortune, I really have no idea how I would handle it. It would be a long talk with my wife, to be sure. I think we'd both like to do something for our parents and then figure out what to do with the rest and what of it would benefit the kids and how.

 

[ivwshane]

Yeah I'm going to ignore those that think they know what they are talking about and just look at the historical data as an indicator.

Conclusion: minimum wage does not increase unemployment for anyone in any meaningful way as to point to a correlation between the two.

http://aneconomicsense.com/2013/03/...nimum-wage-on-unemployment-no-evidence-of-it/

 

[HomerJS]

Here's a study testing two adjoining states New Jersey and Pennsylvania. What do you think would happen if minimum wage in NJ rises? I know its an older study but the last one I knew that did this kind of side by side comparison.

http://davidcard.berkeley.edu/papers/njmin-aer.pdf

Hint...

Contrary to the central prediction of the textbook model of the minimum wage, but consistent with a number of recent studies based on cross-sectional time-series comparisons of affected and unaffected markets or employers, we find no evidence that the rise in New Jersey's minimum wage reduced employment at fast-food restaurants in the state.