I'm most definitely not a fan of minimum wage laws, or of the ideas of universal health care and other similar government mandates that burden companies with additional expenses and make employers potentially over-compensate people that could have worked a little harder when in school, or could work a little harder in their current jobs, or just a bit harder in the job market job search to find something that pays them a little more, and helps them work their way up and out of the low end jobs that typically are paid minimum wages.

If you are making minimum wage, you should look in the mirror and ask yourself why?  In most cases you have just as much to do with your compensation as does anyone else.  Demanding that the government fix it because you aren't smart enough to look elsewhere is stupid.

I remember some years ago having a debate on Usenet about minimum wage laws around the time they had last raised it and I said "I predict that in 10 years, you'll see a lot of these jobs being automated or sent overseas. So if you find yourself checking yourself out at the grocery store in a self service line, remember this." Of course, back in the early 90s, I got flamed and patronized on the reasons why grocery store check out lines couldn't be automated (impossible to stop shop lifting was the basic argument).

Google Groups indexed all of Usenet, didn't it? If you tell me the username you used to use, I think it would be fun for me to go try to dig up the thread and see what other predictions were made and how you used to handle yourself in a flame war.

If minimum wages actually worked to the positive, then why stop with a low minimum wage? Logically, we should set the maximum possible minimum wage, whatever that comes to. Why $7? Why not $50? $500? $5,000,000,000... . Then we could all do one pico-second of work and retire forever on infinite wealth. (Of course, the union dues would be killer. )

The minimum wage laws were a spinoff of the corrupt deal that Gompers made with corporate Amerika to create an artificially high-paid tame union, so that the real union - the IWW - could be smashed. The industrial unions wanted the minimum wage specifically in order to exclude blacks, who were generally less educated and qualified, from extry level positions in the factories, etc.

And, every time the minimum wage is raised, the natural result is that the graphs of unemployment jump straight up in a quantum leap. However, adult skilled labor is scarcely affected - at least immediately, while the other end of the spectrum, the young black men, is devastated. Typically, unemployment rates among the lowest educated minorities doubles immediately after a raise in the minimum.

On a broader scale, the minimum wage, along with the "progressive" income tax, compulsory state indoctrination (euphemistically called "public schools"), the War on Drugs, and a host of other direct violations of basic human rights are the legacy of the proto-fascist "progressives," who championed the idea of the corporate mega-state, pretty much getting their original impetus from dictator Abraham Lincoln.

While I agree MWL's are mostly a "Feel Good" proposal, I think they do have some purpose. That purpose is to keep companies from underpaying people that we all know they would start doing in a heartbeat if the law was removed. Microcenter for example offered a friend of mine a position there at $4.00 an hour +1% Commission, their way to circumvent the MWL and underpay their employees.

Who decides if someone is "underpaid"?  That's just the thing - if your friend accepts a job at $4.00 then why does the government need to get involved.  I'd pay my workers a penny an hour if I could get away with it.  But I can't because the laws of supply and demand keep me from being able to do so -- people wouldn't work the jobs we need for a penny an hour.  It's considered pretty universally accepted that price fixing doesn't work on goods and services (the California energy debacle along with the huge gas lines in the 70s are two examples that spring to mind).  Yet people argue that price fixing wages is a swell idea.

Big companies like Target hire all new employees at minimum wage, automatically, regardless of experience of background. They've had this practice for years, and as MW goes up so does their starting wage. Circuit City recently fired 4,000 of their highest paid employees so they could hire a bunch of minimum wage workers. Over the last 3 years Radioshack has been quietly firing higher paid workers and managers and replacing them with minimum wage clerks. Keeping in mind all of these firings were based solely on pay, not on qualifications or lack of. Another trick they love doing is having only part-time designated employees but still working everyone full time just so they can avoid paying benefits.

How are these tricks?  Again - if the person accepts the job making less than they think they deserve who really is to blame?  If I offer you a penny an hour, you'd tell me to go to hell I assume.  It didn't require the government to be involved.

In states with poor economies often the only jobs available are minimum wage jobs, and even those are scarce, so MWL's at least make those somewhat attractive. Not everyone working in minimum wage positions warrants it, or deserves it, often you will find professors, engineers, programmers and other professions working at places like Target these days. Our country is in the middle of a big job shift, shifting people from higher end jobs down to lower end service jobs, and the net result won't be very good for us.

And that's the crux of the argument for federal minimum wage laws -- one that is pretty compelling.  Without a federal minimum wage, you could have parts of the United States that are like third-world countries.  Except -- in our modern economy, peope can move to places with better jobs and opportunities or companies can move to where the labor is cheaper.  But that was less so the case when this train got started.

This brings to mind a recent issue of USNews headlined with the title "What America Needs to Learn from Everyone Else". Basically it detailed that as a country we are falling behind in almost everything from medical breakthroughs, technological breakthroughs, mass transit, environmental issues, on and on. It is an interesting read to say the least, pointing out that the US continues to riser higher in infant mortality (now 14th), and we're starting to fall behind on life expectancy (50's on the list, down near Chile, Cuba, Slovenia). Quality of life we're actually slipping to new lows.

I read that article and calling is sensationalism would be about the most charitable description I could give it.  Every time I read some article saying how we should be more like Denmark or Norway I just scratch my head wondering if the authors realize how absurd that is.  The problem with statistics is that they are easy to manipulate to get what you want.  Take life expectancy. The difference between the United States (42nd overall at 77.12) and say Australia (79.75) is about 2 years. (my rankings are different because the list I'm using counts countries like Andorra and San Marino).  Anyway, what does life expectancy really say? We have huge chunks of our population that are sedentary, McDonalds eating slobs (like me).  So what does that really prove?  That we need more excercise?  Not to mention that in the United STates, we have significant racial minorities that, for various reasons, have significantly different life expectancies.  The average white American has a life expectancy of 79 for instance.  

That isn't to say that the US doesn't have things that can be learned from the rest of the world.  But some of the "lessons" in that article were silly (like the one making our city streets better for cyclists -- sure, cities seem great if you're living in Manhattan but most of the middle class in the United States live in the burbs). And nearly every country they list we should be more like have plumetting population levels (over half the tips come from countries that have significant population drops in progress -- not a ringing endorsement).

 

I am completely against the idea that minimum wage is not necessary. Minimum wage does NOT work in the current world labor market. That is not because it is wrong for an open market, but that we do not HAVE a truly open world market. A fair labour market cannot exist while the great disparities in exchange rates and cost of living exist. Fact is, I would not even be able to EAT on a wage that in some countries is able to cover a family of four. Is that my fault for being born in the wrong country? Yet due to the price disparities, it is profitable for business to export jobs to countries with vastly different economic conditions than those that exist here.

If a dollar a day buys food/housing for someone in a certain 3rd world country, is it fair to expect someone in the US to work for the same amount, when that would leave said person on the edge of starvation and certainly homeless (said person could eat dry ramen noodles, for example). Yes cheapskates like you think it is right somehow.

As you said, you'd get away with paying a penny an hour if you could. I have no respect for anyone that values other people that lowly.

A free labor market is fine - IF everyone is playing with the same market, but they are not. My theory for a solution? Unified currencies. Is that ever going to happen? Not while the Christian conservatives are in control, as a unified currency could be seen as a "sign of the apocalypse". China as well, would object, as would several other countries. Indeed, most objections would (naturally) come from the countries who benefit the most by the sharp disparities in exchange rates and labour values. Yet, if they refuse to play on a level playing field, why again are we even allowing them to have complete and open access to rape and pillage our economy?

As far as wages go - I'm currently working for a company that pays a contract wage based on the work I produce, all done over the internet. The pay scale is 0.12 per document I process. A few friends of mine signed up and quit because they could not produce quickly enough to make a fair wage, yet I've been able to earn about $10/hour doing this. Since I currently in grad school, the flexibility this offers me is ideal, as I can work when I choose and have no commitments. Now, this company COULD have offered a much lower wage per document - and many do. But they chose to offer a fair wage. Along with that choice - they required all applicants to have a bachelor's degree and pass a strict English test. They did not limit the part of the world anyone could work in, yet it turned out that the only applicants who were approved were from the U.S. and Britain. They also closed the gates on applications when they had just enough people to do the job. Thus they ensured they have a small, well trained pool of workers who are paid well enough to care about how they do their job. Contrast this with the widely publicized Mechanical Turk program that Amazon is offering now. That program allows bidding on menial tasks (much like the one I do, actually). However with their program, the wages are MUCH lower, as are the barriers to entry. The result is that you have thousands upon thousands of people competing for the few HITS that come up, many of which pay only 0.01 or 0.02 per task - significantly less than I make. Yet they have to run each task through 3 or 4 different people to double and triple check the quality of the results. The end result of Amazon's Mechanical Turk is mediocre work done by a huge taskforce of people consisting of teenagers, unemployed/unemployable and 3rd world workers, none of whom make a livable wage. Whereas the company I work with, who uses a similar concept, by limiting their workforce and paying a higher wage, needs a much smaller amount of QA (which is only triggered if the computer picks up certain red flags), and pays a fair wage, albeit to a smaller workforce. Since it is contract work - they are not bound by minimum wage laws. As a businessman, you should know that easy loophole and be abusing it at will. Yet they have chosen to value the work for what it is worth, and by doing so, have enabled themselves to be more selective in their workforce. In an ideal world, all businesses would pay a living wage. This is not, however, an ideal world, and it is full of cheapskates who would pay degreed professionals a penny an hour if it were possible to get away with it. Believe me, if you were paying a dollar an hour, there would be exactly two results. Your employees would starve, and then leave your company. The ones who stayed would be so bad at their jobs that you'd go out of business for gross incompetence. Yet in the end, if every businessman chose to do the same, the labour market would have NO CHOICE but to work for the guy paying 2 cents an hour, then they would have to employ their 4 year old child, slaughter the family dog for meat, and forgo any medical care. Sure, you'd find people desperate enough to do it, because you'd have them over a barrel. Additionally, but having such cheap labour, you would ensure that competition from local sources is nearly impossible, because if someone among those poor DID try to go into business for themselves, they wouldn't be able to earn a living wage themselves due to your monopoly on price. This is, of course, the road this country was heading down before our government wised up and realized that even a capitalist democracy needs some market controls.

Sorry but that's idiotic.

Value is relative.  If everyone was being paid 2 cents per hour, then products and services would cost only a few cents as well because of the same supply and demand factors.  I.e. if people can only pay 10 cents for a loaf of bread then bread is going to cost 10 cents.  That's how it's always worked.

150 years ago, 10 cents per hour wasn't uncommon. And a loaf of bread might only cost 2 or 3 cents.

Today, inflation has turned those cents into dollars. And people make 10 dollars per hour and that loaf costs a dollar or so instead of a few cents. 

I hope your college education isn't economics because if it is, you're getting ripped off. 

As my previous response implied, too many people fail to realize that there really is no distinction between the price of products, services, and labor.  They're all interconnected.  The market ultimately determines how much shoes and socks cost based on the purchasing choices of millions of people. And those purchasing choices are determined by how much they can afford.

As your response makes clear, you don't grasp the relationship between forcing employers to pay higher for their labor than their customers are willing to pay for with the end product causing those employers to seek lower cost labor.  Because Americans choose to buy $10 shoes made in China instead of the $50 shoes made in the United States, it's American consumers, not employers, who are outsourcing jobs. 

 

And what the reality is, is that most of our economic theory is currently based on an industrial revolution valuation of labor, which is increasingly getting farther from reality.

There is a lot wrong with your post, but I will take this one first.  I am sure you are a fine historian, but a very lousy economist.  The truth is our economic theory has nothing to do with the industrial revolution. Simply put, our economic theory/reality is based on the individual maximizing their wealth based upon their greed.  Yes, greed.  They will try to maximize their wealth, and in so doing, provide the customer with what he wants at a price he wants to pay.  Thus the law of supply and demand.  The advent of minimum wages will not help that, only hinder it.  Artificially raising wages accomplishes nothing as then the final product price much be raised - and thus inflation.  SO to use Brad's example, the reason that a loaf of bread costs 2 dollars now is because wages are ten dollars an hour instead of ten cents.

And so the ones making the lowest wage - minimum wage now - are no better off.  And wont be.  DO you even stop to wonder why with all the increases in minimum wages over the past 30 years - that we are still debating the issue?  Because all it does is move the decimal point. It does not make anyone richer relative to prices.

But I suspect your history is not in the dynamics of economics, or you would realize that the law of supply and demand is not a man made law, but a law of human dynamics that man has tried to circumvent throughout history, and failed to do so.  For the simple reason it is not man made and cannot be monkeyed with by good intentions.

ONe last thought on your long response.  Your analogy on the global economy would be appropriate only if the world was a homogenous body of labor and industry.  It clearly is not, as while the people in China make dollars a day (instead of 10s or 100s), they do not have the tools to or knowledge to create goods and services that require more extensive knowledge readily available in a high wage country.  So they can perform the unskilled jobs that Americans once did, but the American economy has moved beyond that stage and their work now requires skills and knowledge beyond that of most unskilled labor.  We can force them (the american companies) to do the same work as those in Malaysia, but then their skills would be wasted - and in order to survive - the fair wage would not be competitive.  Indeed, you hold the view that the unions do, not realizing that they millions of those jobs that have been lost to other countries have not resulted in a corresponding increase in the unemployed of this country.  They have learned new skills - primarily due to the availability of the services needed to train them by the employers you seem to hold in disdain - so that these same employers can maintain a competitive advantage in the new marketplace - the world.

History is not the study of some long dead cultures.  It is the ongoing study of man and his interaction with both the environment he lives in, and the culture he lives in - today.  If you are a student of history, you might want to look at what has happened to the work force in the first world countries since the industrial revolution, and then compare that trend with what is now happening in China and India.  And what happened in the last 50 years in countries like Korea and Taiwan (and to a lesser degree Japan).  What was going on 200 years ago is still going on today - just in different parts of the world.  Some of the world is still mired in pre-industrial society.  Some is in the midst of their own industrial revolutions.  SOme has progressed beyond it.  It is not a static environment that cannot change, and does not change.  It is constantly evolving.  But you are studying one point in time, and extrapolating that since it was so, it must always be so.

It's probably more likely that the US dollar would fall and inflation would rise, depending on how much of the population is on minimum wage. If too many people were affected outsourcing would be unlikely because labour would become cheaper, not more expensive, compared to labour purchased with a weaker US dollar.

But excessive inflation is never desirable, so it's still a very bad thing.



Well it's never really been done, apart of course back in the really old days (ie pre-US days). It's historical fact that the various boni (conservative) attempts to remove state subsidies on grain in Rome tended to lead to rioting and crime waves on the enormous scale. Would it happen in a modern state? Who knows? It's never been tried. Your example isn't a complete removal, so it doesn't really count.

Anyway that doesn't really matter because minimum wage laws aren't really state welfare. They're more an effective political tactic that plays on consumer price memory to manipulate their ideals of success - someone whose first wage was 5 bucks an hour is going to feel 10 bucks an hour is a better wage on first thought. And that's a useful attitude to have in a populace. It implies success without actually having to provide it.