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The Minimum Wage Is Too Damn Low

Discussion in 'BBS Hangout: Debate & Discussion' started by Cohete Rojo, Feb 13, 2013.

  1. Northside Storm

    Northside Storm Contributing Member

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    societally speaking, that's of net benefit to everybody

    less fast food consumed
    more purchasing power across the board

    and unlike what most people run around saying without one look at the economic literature, a disputed effect on aggregate jobs
     
  2. Northside Storm

    Northside Storm Contributing Member

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    Defeating obsolete business models has a lot of practicality in the real world. See: AirBNB (disrupting hotels), Uber (disrupting taxis), MongoDB (disrupting Oracle/SQL databases), Amazon (disrupting retail) etc.

    A lot of businesses are going to have to shape up and "skill up" to keep up with what's going on, otherwise they'll be devoured. Of course, it helps when companies that should be on their knees are regarded as worthy of government protection and kow-towing meanwhile the people who fuel these businesses are nothing more than scoundrels when they ask for a bit of the proceeds from their increased productivity (nope sorry, has to go to the bottom line, haven't you heard, business can't survive otherwise!)

    I have sympathy for small business owners and their employees, I only wish people held them in equal regard, and didn't think of the employees as scoundrels for asking for what is rightfully theirs, while small businesses are simply given everything (up to protection against tech disruptions, if you've been tracking regulations affecting Uber and AirBNB). Both sides should be helped, and businesses should earn what they rightfully deserve---and employees should earn what they rightfully deserve as well!

    [​IMG]

    I completely disagree with your notion that modern education is "dumbed down", and I think it's incumbent on you to prove that the greater number of Americans spending a greater number of time on education are somehow doing it worse than previous generations, if you're going to make such bold unsupported statements.
     
  3. wekko368

    wekko368 Member

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    Societally speaking, can't you say that the reduced consumption of anything will increase purchasing power across the board?

    Can you clarify this statement?
     
  4. Northside Storm

    Northside Storm Contributing Member

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    In this case, referring specifically to how minimum wage increases will increase purchasing power of workers across the board through the cascade effect of wage increases--->the minimum wage worker gets an increase, which justifies the middle class worker getting an increase etc.

    Inflation tends to lag, or not correspond 100% for various factors as well, if you were thinking that. (New Keynesians will argue sticky prices which I think is a terrible argument, but you can apply that logic of menu costs (it is a transaction cost in of itself to change prices in bulk) to this framework).

    If the minimum wage effect somehow triggers a price illusion where fast food is no longer privately efficient (it was never socially efficient) so much the better.

    The neoclassical model predicts increased wage, decreased employment.

    However, a lot of economists have argued that the neoclassical model is too simplistic for the labour market for various reasons---imperfect information (nobody knows who offers what wage, where, really, you only really know the wage after you've passed through, you can MAYBE estimate on GlassDoor), dynamic competition (each job in of itself does not compete with other jobs per say, or not perfectly, this leads to situations of small suppliers facing a very large buyer or a set of very large buyers, which is market inefficient due to the imbalance on both sides) etc.

    And the empirical evidence can be seen to reflect that: see seminal Kreuger and Card study on how minimum wage increases caused no reduction in employment, and may have increased employment.

    http://davidcard.berkeley.edu/papers/njmin-aer.pdf
     
    #364 Northside Storm, Dec 7, 2013
    Last edited: Dec 7, 2013
  5. wekko368

    wekko368 Member

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    So what happens when, as a result of increases to the minimum wage, unskilled workers are replaced by machines (like self-checkout kiosks at grocery stores)?

    That analysis is 20 years old, and given the improvements in technology and automation, wouldn't you agree that the findings from a 20 year old study on the effects of minimum wage and employment are outdated?
     
  6. AXG

    AXG Member

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    My contention is primarily with undergraduate schooling which seemed like a complete waste. Basically if you just showed up, you passed and everybody gets a cookie. The material was/is so painfully easy, or at least that's how I felt. It just seems like a factory, just churning under-qualified and over-entitled students every year.....
     
  7. Commodore

    Commodore Contributing Member

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    The market rate for labor staying flat while productivity increases is evidence workers are not more productive.

    Their skills aren't worth more.
     
  8. Space Ghost

    Space Ghost Contributing Member

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    You're completely ignoring the whole picture. If you double minimum wage, you are doubling it across the board, not just McDonalds. This means the guy to man the register at the gas station's cost goes up, which causes fuel to go up, which causes the price to move goods to go up. That is one single thread in the vast chain. Prices across the board goes up, including the food at the grocery store.

    Then you have people who were making $15.00 and living paycheck to paycheck are now underwater because everything else has gone up. These semi-skilled labor jobs are now forced to increase their wages.

    This type of thinking is exactly why the middle class is eroding. The propping up the poor is coming from the middle classes pocket, not the rich.
     
  9. geeimsobored

    geeimsobored Contributing Member

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    I'm fine with not raising the minimum wage if you create a proper mechanism for workers to negotiate pay fairly.

    You can abolish the minimum wage if you make an attempt to encourage collective bargaining (a good example of this is Germany where there is no minimum wage but there is strong collective bargaining rights)

    But you can't tell me that we shouldn't raise the minimum wage or even have one while taking a dump on collective bargaining rights at the same time.

    Either empower workers to negotiate their own wage via collective bargaining or accept a fair minimum wage and the need to occasionally raise that wage to keep up with a changing economy. But you can't simultaneously destroy collective bargaining and refuse to allow the government to intervene in labor markets. That to me seems like a recipe for disaster.
     
  10. Commodore

    Commodore Contributing Member

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    Nothing stopping workers from collectively bargaining now. You and I and whomever can go to McDonalds and make an "all of us or none of us" demand when we apply.

    This would be so simple if you just let each state set their own minimum wage. You could have fifty laboratories and see what the effects are. But the left likes blanket policy from DC so there is no where to escape from their meddling.
     
  11. Space Ghost

    Space Ghost Contributing Member

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    There is not many people who suggest that minimum wage should not be increased or completely done away with. Its just the short sighted people who think its ok to double minimum wage over night.

    Minimum wage should go up in line with inflation.
     
  12. Commodore

    Commodore Contributing Member

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    It should be done away with.
     
  13. Space Ghost

    Space Ghost Contributing Member

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    I am ok with a regional minimum wage, whether its state or county, but I do feel there needs a threshhold set.
     
  14. Northside Storm

    Northside Storm Contributing Member

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    this is simplistic, and is the dogged view of those for whom market mechanics are father, Bible, and guide.

    If for you the market is always right (despite the market being merely a collection of irrational individuals), I suppose it is easier. "Workers aren't more productive because the owners of capital aren't paying them a fair share of the profits generated on their production". Workers are producing more, and getting less for it. Period.
     
  15. Northside Storm

    Northside Storm Contributing Member

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    This is a more recent study that more or less replicated those results, and concluded that there was minimal employment effects in 2004-2005.

    http://ageconsearch.umn.edu/bitstream/132449/2/10-2-5.pdf

    oh if we're talking about automation of jobs, my prediction is that basically most jobs will be erased by automation even those we perceive as "skilled" if we keep up this current trend of kow-towing to capital: you should look at technology like BeyondCore (http://www.beyondcore.com/), advances in natural language processing, and automation of forms that will basically, if they run through their full course, erase the need for business analysts, lawyers who do clerical type tasks, and to be honest, most people who are out of the loop on strategic planning.

    Entire industries are going to go through massive disruption. A logistics network built on 3D scanning and distributed 3D printers for example would halve the need for transportation, and the other half is going to be attacked by drones (we saw a preview with Amazon).

    As a society, we've decided to unrein capital, and the terrifying thing is capital really doesn't want to deal with labour. The new business models being built are basically very people-lean---5,000 people making billions of dollars sort of thing.

    which is good for the privileged few, but extraordinarily bad for the rest of the world. You can expect a trend where people are more and more blamed for being "unskilled" when their skills are displaced, and sadly most people seem to be willing to accept that---unemployment and desperation because well capital is setting the rules, and the rules say you have to be ever and ever better so that a few people can make a killing, and deplete every resource we can muster.

    it's maddening. It is not the fault of the powerless that they are powerless, and it's about damn time people realized that what they're deploring in others might apply to them as well, and that everybody better prepare to fight (and of course here, I mean politically) for their fair share of prosperity.

    (The perfect example being the internet developed partly on the back of government: but of course, who seeks to get Uber, Facebook, or Twitter capital back to the people that made their infrastructure possible, and fuel their existence? Retail investors shouldn't have to go through IPOs rigged against them to get their fair slice).
     
    #375 Northside Storm, Dec 8, 2013
    Last edited: Dec 8, 2013
  16. Northside Storm

    Northside Storm Contributing Member

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    I agree with you on certain topics.

    On others, I do believe the wealth of information available far surpasses what was previously there. Entire fields are being built right now that were inconceivable 30 years ago.

    On aggregate, I don't think it can be denied that Americans are more-educated, and more skilled on balance then their predecessors, many of whom did not have undergraduate schooling at all.

    I'm not a huge fan of formal education, but one cannot deny that the will of the average American is there. That the system is failing them is not their fault.
     
  17. Commodore

    Commodore Contributing Member

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    You haven't presented any evidence that the increase in productivity can be tied to a more capable worker. You just presume the former is caused by the latter.

    Yet the flat wages are a giant indicator that isn't so.

    The value of labor is determined by the market, by the negotiated wage, not by your personal notion of what someone deserves.
     
  18. Kojirou

    Kojirou Member

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    How two-faced. If you want to destroy fast food, go ahead and say that you want it destroyed. Don't go around enacting policies which will destroy them but at the same time claim that it's in their workers' names. And at the same time, you acknowledge that minimum wage will result in higher prices across the board, yet somehow it'll increase purchasing power.
     
  19. fchowd0311

    fchowd0311 Contributing Member

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    Damn, what school did you receive your degree at? It's finals week at my school and my head is spinning! Lucky you.
     
  20. Refman

    Refman Contributing Member

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    Exactly.

    I remember a lot of sleepless nights studying for exams when I was in college.
     

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