The Harm of Minimum Wage

Accountable · Post by **Accountable** » Sun Oct 22, 2006 5:06 am

I just read a column (LINK) that predicts that Dems will try to raise the minimum wage if they get a majority this election (just 2 weeks away). The minimum wage issue is a smokescreen. Politicians are happy to debate it all day because it looks like they are doing something important, while avoiding the real heavy lifting that needs to be done - such as, well, almost anything besides minimum wage law.

While any mandatory minimum wage is counterproductive, national minimum wage is especially dumb because what passes for a living wage in Arkansas would still qualify a Californian for welfare aid. Conversely, a living wage in California, imposed on Arkansas employers, would bankrupt many and result in skyrocketing unemployment.

Since I don't like to read long posts, I'll stop here and welcome all opinions. Hopefully a congressperson is lurking and can learn something from our ideas.

RedGlitter · Post by **RedGlitter** » Sun Oct 22, 2006 5:19 am

Funny you should put this here Accountable, as my dad and I have been going around and around over this very issue. He says that a minimum wage increase will cut people out of jobs because employers won't be able to pay what they're required to. Considering we're probably only talking a pittance of an increase, I disagree with him. What you said here makes sense to me however. I wonder if the point is moot as minimum wage is not a true living wage. Who can live on $5 something an hour?!

I'm all ears in this discussion.

Accountable · Post by **Accountable** » Sun Oct 22, 2006 5:36 am

RedGlitter wrote: Funny you should put this here Accountable, as my dad and I have been going around and around over this very issue. He says that a minimum wage increase will cut people out of jobs because employers won't be able to pay what they're required to. Considering we're probably only talking a pittance of an increase, I disagree with him. What you said here makes sense to me however. I wonder if the point is moot as minimum wage is not a true living wage. Who can live on $5 something an hour?!

I'm all ears in this discussion. :)Right! Look around at the places you would assume pay minimum wage (burger joints, ec.). Odds are, they pay higher. Besides, do parents really want their 16-year-old earning $35K after school and weekends? The kid could move out and live on her/his own if the parents got "too controlling".

Not to mention that employers see wages-vs-profits as a zero sum gain. If they have to pay more to each employee, and with to maintain profits, the easy answer is to employ fewer employees. How does increasing unemployment help the economy?

Accountable · Post by **Accountable** » Sun Oct 22, 2006 6:17 am

flopstock wrote: The last go-round of minimum wage increase, we were able to afford an inserting machine..it now hit the threshold for being cost-effective.

Because, while we paid more then minimum wage at entry level for the positions, after the increases we needed to adjust what was paid to the workers who had been there for a period of time and should be making more then the entry level pay. a 10 station unit could produce the output of 25 flesh and blood employees. And don't forget that for every dollar paid, you have to match the social security and Medicare tax withheld from the employee(7.65% i think),you have FUTA and SUTA, pension benefits and workers comp insurance..

We are a privately owned company, so rather then lay people off, as they left(retirement, other jobs within organization, quitting or fired) we simply did not replace them.

I think that if they are interested in improving the quality of life, perhaps a tax free zone on any increase, for a start. But I just can't imagine the government opting not to collect its piece of the pie, can you?Perfect example! Thanks, Flop.

There is a cutoff for paying income tax (it's very very low). Raising that might be a real move in the direction they fake. You're right, and I agree they won't do it.

Accountable · Post by **Accountable** » Sun Oct 22, 2006 6:52 am

Wendybird wrote: We have one guy at work who is on minimum wage.

It's not because we want to pay him less money but if we pay him more than minimum he loses out on a load of benefits. He is classed with a medical condition - allowed to work full time but at a restricted rate. If we increase his wage he starts to lose money. In the UK the minimum wage has increased a couple of times in the last year and this guy has had to cut his hours to make sure he still receives the benefits but has the chance to work. If he didn't work he would be lost - completely lost. Having the challenge to get up in the morning and go somewhere gives him a goal in life. He has to remember what he is supposed to wear, where he is supposed to be, who he is supposed to report to (me), and what is expected of him for the day. We bought him an ipod and sat nav to help him and he had to state that these were gifts from friends. If he had admitted they were from his employers then his bloody benefits would have been cut!

I employ him for work around my house (off the books) eg: gardening, landscaping, refuse removal, knocking down walls etc etc. This guy WANTS to work. It is the government that is stopping him from getting a job that he is very capable of doing (landscape gardener) because then they would stop his benefits and he would be worse off!

It's Catch 22!

Minimum wage SHOULD exist to protect the vulnerable, but it also has a bad side.Stripping all the emotion from it (and depending on our relationship to remind you I don't mean to be insulting

), he could do volunteer work to have that feeling of worth. I have a very dear family member in an almost identical situation here in the States. It drives me nuts that there isn't anyone/anything to help people when they hit these gaps in the system.

If he gets paid what he's worth, his medical benefits (that make it possible for him to work) stop, and he can't afford the care required to keep him in "working condition" - is that accurate? So, if he gets paid what he's worth, the end result will be a worsened condition, which will make him completely dependent on the doll (I think I use the word right) with the added burden of a worsened medical condition. So - it follows - it would save the gov't money to taper benefits as his wage increases, rather than cutting it completely.

Not to mention that, in this particular case, requiring employers to pay higher wages would actually increase the burden of the healthcare system.

Nomad · Post by **Nomad** » Sun Oct 22, 2006 10:57 am

Accountable wrote: I just read a column (LINK) that predicts that Dems will try to raise the minimum wage if they get a majority this election (just 2 weeks away). The minimum wage issue is a smokescreen. Politicians are happy to debate it all day because it looks like they are doing something important, while avoiding the real heavy lifting that needs to be done - such as, well, almost anything besides minimum wage law.

While any mandatory minimum wage is counterproductive, national minimum wage is especially dumb because what passes for a living wage in Arkansas would still qualify a Californian for welfare aid. Conversely, a living wage in California, imposed on Arkansas employers, would bankrupt many and result in skyrocketing unemployment.

Since I don't like to read long posts, I'll stop here and welcome all opinions. Hopefully a congressperson is lurking and can learn something from our ideas.

Whos paying minimum wage friend, McDonalds ? You think McDonalds will go bankrupt if they shell out an extra $120.00 a week ?

Wolverine · Post by **Wolverine** » Sun Oct 22, 2006 12:44 pm

Nomad wrote: Whos paying minimum wage friend, McDonalds ? You think McDonalds will go bankrupt if they shell out an extra $120.00 a week ?
no MickyDs won't go out of business. Burger King won't, Carl's Junior won't.

But Dad and i might. every summer we hire high school kids to "walk beans" and detassel corn for us. we hire 75-100 kids. that's enough employees to fall under the Department of Labor guidelines. now we always pay a minimum of $6.00. more with experience. we have two guys that run the crews at $12/hr.

if the Gov't raised the minimum wage, dad and i would have to pro-rate everyone's pay the following season.

other farmers offer minimum wage to do the same work. but dad and i offer more so we can ensure that the kids will show up and will "earn" it.

plus there's bonuses when working for us. at the end of the season, we buy 50 tickets to Adventureland *and hand them out to those who showed up the most, covered the most acres, etc.

it would be very difficult to stay in business if we had to start everyone off at $7 and the supers at $14 or more.

being a small business owner really changes your views on things.

*Adventureland is a small amusement park here in Iowa. similar to World's of Fun in Kansas City.

buttercup · Post by **buttercup** » Sun Oct 22, 2006 1:58 pm

scotland is filling up with polish people deleriously happy to work for minimum wage, we just cant get scots to do it

Wolverine · Post by **Wolverine** » Sun Oct 22, 2006 2:16 pm

flopstock wrote: Hell boy, where do i sign up?

and what exactly do you offer in the way of bonuses?:sneaky:
all sorts of stuff.

Accountable · Post by **Accountable** » Sun Oct 22, 2006 2:24 pm

Nomad wrote: Whos paying minimum wage friend, McDonalds ? You think McDonalds will go bankrupt if they shell out an extra $120.00 a week ?I got back too late to answer your question. Flops & Wolverine did nicely, though.

What is the purpose of minimum wage to you? Should it be a "living wage"?

Accountable · Post by **Accountable** » Tue Oct 24, 2006 3:58 am

From Di's cite:After nearly 100 years, employers are now calling for the abolition of the system and a reduction in the rights and conditions of Australia's workersI've a funny feeling only the first half of that statement is accurate, the rest, accusation.

Again, what is the purpose of minimum wage?

Accountable · Post by **Accountable** » Tue Oct 24, 2006 4:34 am

Diuretic wrote: I can only respond in the Australian context of course. Yes, it's an accusation but one built on facts so it's not scaring the horses so to speak.

The purpose of the minimum wage here in Australia is - and I think this is close to the original language - to allow a worker to live in "frugal comfort". In other words, here at least, the idea is that any worker should be able to sustain themselves and their family by working at their job and that they shouldn't be exploited.Is your minimum wage enough to allow that? I know ours certainly isn't.

Don't teenagers get minimum-wage jobs? Do we really want kids making enough money to "sustain themselves"? Also, if I am a small business owner, I would be willing to pay a few bucks for a janitor, but definitely not enough to sustain a janitor and family in frugal comfort. So without minimum wage, a janitor gets a job; with minimum wage, he gets nothing. Doesn't sound helpful to me.

guppy · Post by **guppy** » Tue Oct 24, 2006 6:22 am

Look around us yall. we are slowly slipping into a recession. the housing market is slowing down. The cost of construction material is skyrocketing. Gas prices are zooming. The cost of food is going up by leaps and bounds. We are already in a decline. it is not going ot matter what the minumum wage law is. Any thing the government does at this point is not going to stop what is happening. In the next few years, alot of houses are going to get repoed. Farmers are going to lose their farms. We are already in a cycle that is not going ot stop.

Post by **Bryn Mawr** » Tue Oct 24, 2006 3:26 pm

Accountable wrote: Perfect example! Thanks, Flop.

There is a cutoff for paying income tax (it's very very low). Raising that might be a real move in the direction they fake. You're right, and I agree they won't do it.

Over here we've a tax free zone for the first (aprox) £5,000 of income followed by a half tax band for the next few thousand. There's a minimum wage of £5.50 (ish) / hour but the main backstop is FIS (Family Income Suppliment) which will make the income of any family where at least one member is in work up to a living wage. All of this is fairly much index linked.

So with FIS an increase in the minimum wage does not benefit the worker in a largee number of cases (unless he's working full hours) - it just transfers the cost from the government to the employers.

There's a direct link between increases in the minimum wage and decreases in the number of unskilled jobs.

In my eyes Acc is right - far better to raise the tax free threshold and get people out of the tax trap than to raise the minimum wage

Accountable · Post by **Accountable** » Tue Oct 24, 2006 4:48 pm

Interesting system, Di.Diuretic wrote: If someone can't get work then they get unemployment benefits from a federal government agency. Not indefinitely, surely! :yh_think

Accountable · Post by **Accountable** » Wed Oct 25, 2006 3:51 am

Bryn Mawr wrote: In my eyes Acc is right - far better to raise the tax free threshold and get people out of the tax trap than to raise the minimum wageMy apologies for not acknowledging this yesterday. We agree rarely enough that these occasions should be celebrated. :-6

Post by **Bryn Mawr** » Wed Oct 25, 2006 10:47 am

Accountable;440102 wrote: My apologies for not acknowledging this yesterday. We agree rarely enough that these occasions should be celebrated. :-6

You speak a lot of sense my friend and obviously think deeply before you do so.

A shame we see the world from the opposite sides of the mirror. :-6

Accountable · Post by **Accountable** » Fri Oct 27, 2006 4:00 am

guppy;439197 wrote: Look around us yall. we are slowly slipping into a recession. the housing market is slowing down. The cost of construction material is skyrocketing. Gas prices are zooming. The cost of food is going up by leaps and bounds. We are already in a decline. it is not going ot matter what the minumum wage law is. Any thing the government does at this point is not going to stop what is happening. In the next few years, alot of houses are going to get repoed. Farmers are going to lose their farms. We are already in a cycle that is not going ot stop.
Right. It's a cycle. It will turn; the experts are already predicting it. The stock market's going up for now but it will soon turn ... and turn back again ... and then again.

Houses don't "get repoed" just on a whim. People get suckered into borrowing more than they can afford on an adjustable loan, then have the audacity to be surprised when the rates go up. Which direction did the expect the rate to adjust, when it was already at rock-bottom? It's bad consequences for bad choices, nothing more.

Yet none of this is affected in the least by the minimum wage, at least in the US. Ya can't afford a house payment on minimum wage, and farms employ people, and would be hurt by raising them not helped.