Is Raising the Minimum Wage Economically Advantageous?

[DeletedUser44785]

Once all those on welfare are starved to death due to the cancellation, I suppose you are technically correct. But all the human rights violations would not be all too pleasant.

yes god forbid the country quits letting some people take advantage of the system. hrv there'd still be soup kitchens.

 

[DeletedUser]

First, just because the study includes evidence from outside the U.S. doesn't mean it's irrelevant to the topic. In fact, we can turn this argument as the studies from outside the U.S. give a broader scope to the metastudy and therefore is more accurate.

I'm not sure if you can claim this. Again, economics is not my area of expertise, but I'd imagine that they are very country-specific and that you can't simply apply findings from foreign research to your ow situation.

Additionally, just because they cited some of their own studies doesn't make it inaccurate. Know the expression: If you want something done right, do it yourself?

It doesn't, but it does make it a bit sketchy. I think people can never be completely unbiased. I think it's good practise to avoid ever using your own work as a source.

And lastly, on the statement that it is more subjective and essentially worse than that study, this was only said because the publisher of the study you are citing knew that this was the leading study in favor of unemployment effects and therefore tried to combat it. Anyone would say that their study is better, yet this does not make it true.

This is true but the big difference is that the people from your posted paper are the most famous economists who try to prove that raising the minimum wage results in job loss. They have a strong connotation with that view, so they appear much more biased. The authors of the study I posted have no such association, therefore they're somewhat more neutral I think.

Now, I will be extending/clarifying some points:

The main point of raising the minimum wage is to help lift people out of poverty, but as I have shown, this isn't actually what happens. In fact, we can see that the opposite happens, meaning raising the minimum wage won't do what it's supposed to do.

Is it? I thought the main point was to give the lowest-income workers a more 'normal' life.

$10.10 isnt to bad, i just think that raising it to $15 is ridiculous. You can survive off $10. My brother lives in California and he is able to pay for rent, food, gas, and he still has some time and money to have fun. You just have to be smart with your money.

Lol That's one of the first things I said.

 

[DeletedUser33530]

$10.10 isnt to bad, i just think that raising it to $15 is ridiculous. You can survive off $10. My brother lives in California and he is able to pay for rent, food, gas, and he still has some time and money to have fun. You just have to be smart with your money.

Try living in new York lol. My mother could afford a mansion close to anywhere else.
But yeah I like 10.10 as the new number and then adjust that for inflation annually. I seriously have no clue why we weren't already doing that.

 

[DeletedUser]

Try living in new York lol. My mother could afford a mansion close to anywhere else.
But yeah I like 10.10 as the new number and then adjust that for inflation annually. I seriously have no clue why we weren't already doing that.

Yeah I was very surprised with that as well actually. Now you're going to have the exact same debate every 10 years.

 

[DeletedUser]

I'm not sure if you can claim this. Again, economics is not my area of expertise, but I'd imagine that they are very country-specific and that you can't simply apply findings from foreign research to your ow situation.


It doesn't, but it does make it a bit sketchy. I think people can never be completely unbiased. I think it's good practise to avoid ever using your own work as a source.


This is true but the big difference is that the people from your posted paper are the most famous economists who try to prove that raising the minimum wage results in job loss. They have a strong connotation with that view, so they appear much more biased. The authors of the study I posted have no such association, therefore they're somewhat more neutral I think.


Is it? I thought the main point was to give the lowest-income workers a more 'normal' life.


Lol That's one of the first things I said.

Sorry, I'm really busy now...I'll try to get to a response to this soon but with some drama in Actium, gold trading in the new U.S. world and the new world coming out tomorrow, Idk how quick that will be. Just wanted to let you know I haven't forgotten

 

[DeletedUser33530]

neat graph I found while being annoyed with Jeb Bush today.

 

[DeletedUser]

Interesting topic.
The new budget was just announced in the UK so relevant there too.

We are going to get a load of cuts to welfare, but a 70p increase in the minimum wage to £7.20 and increases to £9 by 2017 enshrined in law.
They have offset the cost to businesses by lowering corporation tax.

I am torn between the benefits of the increase... As a young person who until recently was working as a waiter, the increase is incredible. That is a huge increase and for someone who is working 50 hours a week, represents £140 more each month.

However looking at it from the point of view of a manager of a small business, it is a disaster. Small businesses have barely just recovered from the crash and now they are being forced to find thousands of pounds more per month (depending on the size of the business) to pay staff. All of this, supposedly because the increased wage means people will supposedly be spending more in the restaurant, leading to the money being made back. I'm sure this is true for certain goods and services, but where I work is in a university town and most of the students don't work meaning this will have no effect on the company other than to add more expenses.

I agree with the rise in principle and welcome it as a step towards a national living wage, however the benefits are not universal and I can see a strong argument being made for reducing government intervention in the economy and letting firms pay what they can afford to pay. The market will decide, if a firm offers too little they won't get staff and too much and they'll start losing money... The market always provides.

 

[DeletedUser33530]

However looking at it from the point of view of a manager of a small business, it is a disaster. Small businesses have barely just recovered from the crash and now they are being forced to find thousands of pounds more per month (depending on the size of the business) to pay staff. All of this, supposedly because the increased wage means people will supposedly be spending more in the restaurant, leading to the money being made back. I'm sure this is true for certain goods and services, but where I work is in a university town and most of the students don't work meaning this will have no effect on the company other than to add more expenses.

the logic is (which many economicist agree with) that if you make more money you will spend more money. Maybe not at your place of work but you will spend more money. So business will find the money the same place they always find money, from customers who will now be spending more.

I agree with the rise in principle and welcome it as a step towards a national living wage, however the benefits are not universal

hardly anything is universally benefitting everyone and everything

and I can see a strong argument being made for reducing government intervention in the economy and letting firms pay what they can afford to pay.

yes because that's how capitalism works. Companies always pass on higher earnering to their employees. Everyone remembers during the roaring twenty's in American when the rich were just raising wages like nobody's business. It happens every time and by that I mean it has never happened in all human history.
A firm will never pay what they can afford. They will pay the bare minimum amount physical possible in order to make a larger profit. That's capitalism.

The market will decide, if a firm offers too little they won't get staff and too much and they'll start losing money... The market always provides.

if they offer too little people will then leave to go to the job across the street were they are again offering too little. They shall then return to the first job and find the jobs have been taken by people even more desperate them then. As everyone is desperate and living on low wages they can no longer strike without starving or losing their job. Thus they can't fight for a wage increase and will live the horrible lives that market has provided. Meanwhile the rich will be having 10 course meals and toasting to ridiculously large profits.

 

[DeletedUser]

the logic is (which many economicist agree with) that if you make more money you will spend more money. Maybe not at your place of work but you will spend more money. So business will find the money the same place they always find money, from customers who will now be spending more.

But as I said in my post, there are certain areas and types of industry where this just isn't the case. Areas that rely on student trade for example, many of whom don't work.

hardly anything is universally benefitting everyone and everything

But what you have to weigh up therefore is whether the benefits to some outweigh the cons to others. I'm sure they do, but i'd like to see some stats in a couple of years looking at how this huge increases affected small businesses. I just don't see this as being conducive to our recovery, we need small businesses and this increase certainly isn't pro-small business.

yes because that's how capitalism works. Companies always pass on higher earnering to their employees. Everyone remembers during the roaring twenty's in American when the rich were just raising wages like nobody's business. It happens every time and by that I mean it has never happened in all human history.
A firm will never pay what they can afford. They will pay the bare minimum amount physical possible in order to make a larger profit. That's capitalism.

They do in some cases. Though the firm's main prerogative is to maximise shareholder profits, not staff welfare, so it is understandable that they don't. Though there are some notable examples of this not being the case, take a look at Google for example. Their HR policies are legendary, though they are of course not the norm...

if they offer too little people will then leave to go to the job across the street were they are again offering too little. They shall then return to the first job and find the jobs have been taken by people even more desperate them then. As everyone is desperate and living on low wages they can no longer strike without starving or losing their job. Thus they can't fight for a wage increase and will live the horrible lives that market has provided. Meanwhile the rich will be having 10 course meals and toasting to ridiculously large profits.

I'd disagree with this actually. I'm not saying firms will pay the most they possibly can, but it is in their interests to keep staff turnover down, hiring new staff has a cost and the quality of the service provided often decreases if you have a high staff turn over. Firms want to keep employees as they have invested money in their training and so it is unlikely they'd offer a rock-bottom wage, forcing staff to leave. If a firm is paying too little and all their staff walked at the same time, they'd be paralysed. Staff always have some degree of power. Unions didn't just spring up, they evolved when staff realised that if they worked together, they did have a large degree of power over their employers.

Firms will naturally increase their wage in a free market, but they will do it when they are ready and can afford to do so. It is in their interests to do so in order to keep their staff and attract better, more highly trained individuals. The issue here is that we are having a raise in one year equivalent to the last 6/7 years' of increases, firms are just not ready for this and I think we'll see small businesses suffering.

 

[DeletedUser33530]

But as I said in my post, there are certain areas and types of industry where this just isn't the case. Areas that rely on student trade for example, many of whom don't work.

So are students just not buying things then? In which case these businesses are screwed either way.

But what you have to weigh up therefore is whether the benefits to some outweigh the cons to others. I'm sure they do, but i'd like to see some stats in a couple of years looking at how this huge increases affected small businesses. I just don't see this as being conducive to our recovery, we need small businesses and this increase certainly isn't pro-small business.

small businesses tend to disagree

They do in some cases. Though the firm's main prerogative is to maximise shareholder profits, not staff welfare, so it is understandable that they don't. Though there are some notable examples of this not being the case, take a look at Google for example. Their HR policies are legendary, though they are of course not the norm...

I would like to point out that not only did you only named one case you supported the fact that most companies wouldn't increase wages without being forced to.

I'd disagree with this actually. I'm not saying firms will pay the most they possibly can, but it is in their interests to keep staff turnover down, hiring new staff has a cost and the quality of the service provided often decreases if you have a high staff turn over. Firms want to keep employees as they have invested money in their training and so it is unlikely they'd offer a rock-bottom wage, forcing staff to leave. If a firm is paying too little and all their staff walked at the same time, they'd be paralysed. Staff always have some degree of power. Unions didn't just spring up, they evolved when staff realised that if they worked together, they did have a large degree of power over their employers.

I will point to the entire indurstrial revolution as proof that this is naive. Minimum wage employees are easy to replace and that's why companies can afford to pay them minimum wage without riots. Also unions sprang up when people got so despressed that they would risk being fired because either way they would probably die.

Firms will naturally increase their wage in a free market, but they will do it when they are ready and can afford to do so.

You should probably tell the firms that cause they didn't get that memo in the last 40 years.

Spoiler

It is in their interests to do so in order to keep their staff and attract better, more highly trained individuals.

we are talking about minimum wage employees. Also known as unskilled workers.

The issue here is that we are having a raise in one year equivalent to the last 6/7 years' of increases, firms are just not ready for this and I think we'll see small businesses suffering.

small businesses tend to disagree

 

[DeletedUser]

So are students just not buying things then? In which case these businesses are screwed either way.

My point is that they are usually not working, so an increase in minimum wage doesn't affect their disposable income as it typically comes from a grant from the government. Ergo, An increase in minimum wages doesn't help businesses where the main market is students.

small businesses tend to disagree

I think the key word in that document is 'Gradual'. I agree with a gradual increase as I said, firms will increase pay when they can afford to. I wouldn't call an 11% increase gradual.

I would like to point out that not only did you only named one case you supported the fact that most companies wouldn't increase wages without being forced to.

I said that they would increase wages in order to keep employees and attract more highly skilled individuals. And being forced to by their employees demanding higher wages is different to being told to increase wages by law, across all areas of the economy.

I will point to the entire indurstrial revolution as proof that this is naive. Minimum wage employees are easy to replace and that's why companies can afford to pay them minimum wage without riots. Also unions sprang up when people got so despressed that they would risk being fired because either way they would probably die.

Not that easy... I work in a restaurant and we are on minimum wage. Training new staff takes months... Are you saying that all minimum wage jobs can be instantly mastered? I'd think not and as such, a high staff turnover leads to training costs and quality of service/product decreases.

I am also unsure about your argument on trade unions... I say that staff have always had power through collective bargaining. There was no minimum wage in the UK until 1999, the first union started in the mid 19th century. They wanted conditions and pay to improve so they started using collective bargaining to force employers to give in to demands, despite it being outlawed by the government. Employees have the power, no firm would survive if employees walked out.

You should probably tell the firms that cause they didn't get that memo in the last 40 years.

Spoiler

All I see here is a net increase in wages... I am not talking about anything to do with productivity. It isn't like that graph proves that workers are working harder and producing more even on low wages, it shows the effects of the rise of mass production meaning that firms are able to increase production and keep wage costs low- A totally different argument.

we are talking about minimum wage employees. Also known as unskilled workers.

See my point above. Unskilled doesn't mean there is no cost of replacement.

small businesses tend to disagree[/QUOTE]

 

[DeletedUser33530]

My point is that they are usually not working, so an increase in minimum wage doesn't affect their disposable income as it typically comes from a grant from the government. Ergo, An increase in minimum wages doesn't help businesses where the main market is students.

grants from the government? :heh: Is that a UK thing? If so then ignore everything i have said about this particular part lol.

I think the key word in that document is 'Gradual'. I agree with a gradual increase as I said, firms will increase pay when they can afford to. I wouldn't call an 11% increase gradual.

I would have loved for it to be gradual as well but sadly firms have neglected to raise pays when they could afford to so we kind of need the raise right away.

I said that they would increase wages in order to keep employees and attract more highly skilled individuals.

If it wasn't a minimum wage job i would agree.

And being forced to by their employees demanding higher wages is different to being told to increase wages by law, across all areas of the economy.

Yeah the difference is for one of those they can just hire new desperate people as employees and pay them the same. The other they can't ignore.

Not that easy... I work in a restaurant and we are on minimum wage. Training new staff takes months... Are you saying that all minimum wage jobs can be instantly mastered? I'd think not and as such, a high staff turnover leads to training costs and quality of service/product decreases.

depends on the job to be fair. Still it might be an incovience but many large companies can afford it in a second. Smaller businesses would have a more difficult time.
By the way just to keep in mind. We are trying to help out full grown adults with families here. Not workers in or fresh out of college.

I am also unsure about your argument on trade unions... I say that staff have always had power through collective bargaining. There was no minimum wage in the UK until 1999, the first union started in the mid 19th century. They wanted conditions and pay to improve so they started using collective bargaining to force employers to give in to demands, despite it being outlawed by the government. Employees have the power, no firm would survive if employees walked out.

not to avoid this but i feel it's getting beyond the point and I kind of don't want to write a response

All I see here is a net increase in wages... I am not talking about anything to do with productivity. It isn't like that graph proves that workers are working harder and producing more even on low wages, it shows the effects of the rise of mass production meaning that firms are able to increase production and keep wage costs low- A totally different argument.

The graph shows wage increase flatlining while production increases in the last 40 years. Firms are producing more thus making more thus being able to afford to pay people more. They haven't paid people more and they won't unless they are forced to because why would they. If you are a business, and you can afford to pay people more but you don't have to pay people more why the hell would you pay them more?
Also fun fact. Had the minimum wage simply tracked U.S. productivity gains since 1968, it would be $21.72 an hour. So unless companies were completely brankcrupt during an economic boom they can afford a lot more than they are paying.

See my point above. Unskilled doesn't mean there is no cost of replacement.

large business can afford this cost easily. Small businesses are a different story but i don't believe the minimum wage workers we are tyring to help work at many small businesses.