Question for Minimum Wage supporters

that would be like saying a car is worth 3-5 times more than it costs to buy it. If its worth more then of course people would be willing to pay more. 1+1=2 [/quote]

Once again we have an expressed opinion and even an analogy that are based upon..... absolutely nothing.

The cost of labor compensation is a percentage of gross revenue that has to fund all expenditures of the enterprise. Labor compensation of between 20% to 30% of gross revenue is typical (there are always exceptions) because it's a time tested formula that is used in almost all business planning. Anyone that has ever created a business plan and successfully operated a business knows these number are virtually carved in stone. Most enterprises target 25% which gives a little leeway either direction in the business plan.

In any case the relationship of gross revenue to labor cost of 3:1, 4:1 or 5:1 is established by the business plan because it works historically. It is not arbitrary and is not even disputable for the typical enterprise.

The single brain cell Republican likes to cite the "Law of Supply and Demand" but they've never taken the time to learn and understand the caveats and conditions that must be met before Supply and Demand establishes worth (value).

For example here are just a few of the conditions that must be met.

1. There cannot be collusion between those creating the supply and/or those creating the demand (e.g. price fixing).
2. The supplier must profit and the buyer must benefit from the transaction.
3. The transaction must be completely voluntary without any direct or indirect coercion on either the purchaser or the seller.
4. There must be a statistically significant number of sellers and buyers (e.g. a monopoly or an extremely limited number of suppliers and/or buyer)

In just reviewing these four conditions there is something that becomes evident. The Law of Supply and Demand to establish the worth (value) of goods and services from that are sold by enterprise is valid but the Law of Supply and Demand can only be used to establish the worth (value) of Labor in some, but not all, situations. Below are two conditions where the Law of Supply and Demand cannot be used establish the worth (value) of labor.

If the compensation is less than the cost of living for the employee then the employee is "operating at a loss" in violation of condition #2.

If the applicant for a job doesn't have the financial resources to live without employment for an extended period of time then coercion exists forcing them to involutarily accept employment compensation they would otherwise refuse violating condition #3.

I know it's hard for a single brain cell to wrap itself around so many simple things at the same time and it's obvious that they can't most of the time. "Conditions, rules and caveats" have never been a strength for Republicans prefer to focus on zingy one-liners that sound good but they don't typically have much of a clue when it comes to understanding anything about what they're saying.

So I'll kick back and wait for more nonsense zingy one-liners like "tax cuts create jobs" or "enterprise is over-regulated" that are delivered straight-faced by single brain cell Republicans without any understanding or comprehension of the fallacy of these zingy Republican one-liners. What the hell, they sound good even when they're wrong.

 

Ahhh another one brain cell Republican zingy one-liner...

Okay, I just addressed the fallacy that "The Law of Supply and Demand" can always determine the "worth" of all things in all cases especially when it relates to labor compensation where exceptions exist.

So this is a test.

Can a single brain cell Republican can analyze why the "Peaceful Market Place" is incapable of defining the value of labor in establishing compensation?

It's a really, really, simple explanation and I just know you can figure it out if you strain yourself just a little bit. Come on, let's hear it, I know it's right on the tip of your tongue so let's see if you can spit it out. I'd hate to see a Republican choke on the truth just because they're afraid to admit it because they'd look intelligent.

 

The OP asked if there was a mathematical formula to calculate the appropriate minimum wage. There is, although government intervention disallows its' use.
minimum wage = wage offered by employer is acceptable to prospective employee
Somehow we seem to have come to believe that an adequate income to provide for both our needs and wants should be achishouldevable with an 8 hour work day, 40 hour work week.

 

The title of your thread is nothing but a generalization. He worth of an employee to a business is based on their contribution to the earnings of the business, the education and/or experience the job requires and the availability of candidates for the job. So, were no education or experience is necessary and they are plenty of applicants for the job, the wage will be lower than the opposite. If no one will work for the offered wage the wage offered will likely increase.

And for our small business where the employees staffing the office are crucial to the business, we are willing to pay well above the minimum wage and offer benefits such as fully paid health insurance, profit sharing contribution after 1 year employment and one weeks paid vacation after 1 year employment.

Employers will compensate employees critical to the business and where longevity is important.

To force the hourly wage will mean fewer minimum wage jobs for unskilled, uneducated workers. PERIOD

 

Obviously true for enterprise because it the price is below the cost then the business cannot survive. Because we know this criteria works for enterprise let's apply it to labor.

The costs for the worker (i.e. their minimum mandatory expenditures - or cost of living) must be reflected in the price paid for the labor. If the price paid for the labor of the person is less than what it costs them to live then logically their only solution is to stop existing by committing suicide.

What a novel economy that would make. People work putting money in the pockets of the employers until they're until overcome by debt and have to kill themselves. If the employee has to kill themselves then they should hang themselves right if front of the business so we can count how many people the employer is responsible for killing just to make an extra dollar.

 

That hypotheses would depend upon how many children have to be fed and cared for - and whether both spouses work.

Which is a high-variable option - and those numbers are available at the Census Bureau site ...
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The destination is clear - only the willingly befuddled are confused.

The MW must raise to a level of the Poverty Threshold - so that will depend upon family number. It will also have to depend upon prevailing incomes. The Poverty Threshold and Average Income in a state should be taken into account - or states will start competing with one another, which is not the point of such a policy.

If all that sounds very complicated, it's because the situation is complicated. And, of course, too many cooks spoil the broth.

And whilst we discuss this, and we've been discussing it for a long, long time, 13.9% of Americans fester below the Poverty Threshold - and that's since 1965*

(It's all very nice to discuss it in a blog, but that discussion rarely solves anything at all.)

* View attachment 46461

 

2016 Federal Poverty Level
persons amount hourly wage
1 $11,880 $5.70
2 $16,020 $7.68
3 $20,160 $9.67
4 $24,300 $11.65
5 $28,440 $13.64
6 $32,580 $15.63
7 $36,730 $17.62
8 $40,890 $19.61

Where justice is denied, where poverty is enforced, where ignorance prevails, and where any one class is made to feel that society is an organized conspiracy to oppress, rob and degrade them; then neither persons nor property will be safe. (Frederick Douglass)

 

Piffle. When's the last time you had a robot serve your BigMac at McDonalds. I, frankly, would never care to interact with a robot.

But neither is that the point. The point is this: By providing the necessary means to a Tertiary Education (vocational, 2- or 4-year schooling) we allow people to better their revenue horizons. Let those menial jobs be performed by robots. Who cares, they are "menial".

We've no choice. We never had a choice. The Industrial Age ended the Agricultural Age, and is now being replaced by the Information Age.

Let's accept Age Evolution with a smile (It's been around for a great while in the evolution of mankind); and get on with it ...
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ROAD-KILL ON THE HIGHWAY OF LIFE

Piffle again. You know the response.

Higher wages mean higher prices - but so what? People have more money to spend, so prices are only marginally more expensive.

You are obnublated by prices, as if they are the be-all and end-all of our existence. They are just indicators of relative value in the Supply & Demand equation.

The objective of an economy is to assure as full a level of employment at decent revenues as is humanly possible. Which is an indicator of a lifestyle that is acceptable for all, and is not demeaned by a perpetual existence in poverty.

Having 43 million men, women and children incarcerated below the Poverty Threshold is a huge blemish upon America - showing that what matters uniquely in the nation is "winners".

Because "losers" are just road-kill on the highway of life ...
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- - - Updated - - -

I'm done.

Moving right along ...
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Thank you, and I know the numbers.

Still, I have a lurking suspicion that each state's case is "special" historically. Which is why I think we need a Federal law stipulating that a Minimum Wage is in place across the nation uniformly - but we need to give the states "time-to-get-there".

Should we avoid states "competing on the MW"? That's a difficult question to answer. Because the costs-of-living vary both naturally and often greatly from state to state.

Admittedly, it's a complex issue, and I am surely not competent in the subject. But, I doubt nonetheless that one national MW is fair and adequate. It may be nonetheless better than the hodgepodge of MW today - as shown here:

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SLAVE WAGES?

This is what will happen more than likely before we get a "uniform" National Minimum Wage.

Given the hodgepodge of minimum wage as exist today (from here):


Today, states are "competing on the MW". Some states have none-at-all, saying effectively "come build here, we've got slave-wages!" Is that the American work-place that we want for our people?

States must not be induced to compete on wages. Which is tantamount to "beggar-thy-neighbor": and tantamount to thinking "wages, like all else in America, are obliged to compete".

MY POINT?

I agree the competition is fine for the market-place, but I don't see how wages benefit from such competition:
*Does it make products better? No.
*Does it automatically create more jobs? Only if the resident talent available justify hiring.
*Does it induce states to compete on wages? Yes, but what is the benefit of that?
*That is, does the competition bring out better talented workers? No, not necessarily and if so only as regards highly specific talents.

We are a nation of individuals/families first and then a nation of profit-seeking companies secondly. The latter should serve the former in providing work, given that the former are also the ultimate Consumers for which the products/services are intended!

Having a pitiful MW does not enhance Consumers' ability to consume - but just the opposite.

It seems we've not yet understood that in the US; and it's about time we woke up. Consider our national distribution of Income, as seen from the New Yorker*:


Just 10Percent of families obtain almost 50% of all the income generated by the economy. We 90Percenters must scramble after the rest!

*Chart based upon historical income studies by Piketty& Saez
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wrong of course. You are assuming there is a fixed amount of money that must be divided. Total mistake obviously. Do I need to explain it to you?

 

That is not what caused the Great Depression.

The underlying cause of the Great Depression was a shift to Electro-Mechanical Industrialization, resulting in Surplus Labor. An additional series of government blunders exacerbated the situation, including the establishment of protective tariffs and a massive tax increase, plus failed banks.

Stock Market crashes in and of themselves cannot cause Recessions or Depressions.

For the US, the Great Depression starts with the 1925 Recession, continues with Recessions in 1928, 1930, 1935, 1937, 1946 and 1949. You could also include the three Recessions during the Eisenhower Administration with the third and final Recession ending in 1961 during the Kennedy Administration.

 

THE RECURRING MUNEY, MUNEY, MUNEY CRAZE

From WikiPedia, Causes of the Great Depression, Excerpt:

Upper-income taxation took a plunge in 1921 from above 70% to around 25%, which helped trigger a massive stock-market speculation later in the decade of the wildest kind (since the controls now in place were not then). Consider the history of income taxation in the 1920s here:
View attachment 46473

There were other factors, yes, (amply discussed in the WikiP-entry linked above, such as yours from neo-classical economists). I nonetheless maintain that history repeated itself in 2008 for the very same reason - resulting from the fact that Reckless Ronnie had brought upper-income tax rates greatly down again in the 1980s. I will insist also that history repeated itself. The much lower Upper-Income Taxation is a key factor in propelling some to "Make a Quick Megabuck on Wall Street" pre-2008.

Speculation is simply a matter of human greed incentivized by low upper-income flat-tax rates. The US had gone mad in this 21st century version of a "Muney, Muney, Muney" craze just as it did in the 1920s.

And, sure as the sun rises, it WILL happen again for as long as the US does not revert to a highly progressive income tax to subdue that motivation ...

 

any economist on earth agree with you? Any respected non economist?? Who???????????

 

As did I, but since you mentioned it I thought others may be interested in what they are.

Are you suggesting that inflation needs to be applied proportionately so that the cost of living would be the same nation wide?

A great many things vary naturally from State to State, and that begs the question, "Who should ultimately be making the decisions which have effects on State budgets and taxes, State and local governments or the Federal government?"

 

As I understand the definition of "slave", it means one is the property of another, and therefore can be forced to do something. An employee is free to seek work elsewhere if the wages paid are unsatisfactory.

We have a "uniform" National Minimum Wage, called the Federal minimum wage. Would you prefer States or local governments be denied the ability to set a higher minimum wage than that set by the Federal government?

All States are bound by the Federal minimum wage. No State can set a minimum wage 'less' than that set by the Federal government.

Competition between States is based more on State taxes, local cost of living, and probably a great many other variables but not much on the minimum wage.

Our greatest source of competition comes from other countries, where our poverty level and minimum wage is much greater than theirs.

 

You obviously do not live below the Poverty Threshold.

Yes, since they would do it not uniformly and employ it to "compete" with other states to attract new business. Which means the existing MW, wholly inadequate, is maintained - or in two states that need it the most (Georgia and Wyoming), it does not even exist.

(Mind you, in this latter case, the states probably have good reasons for not having a minimum wage - for instance, lack of industry and mostly self-employed. But these people need more than just a subsistence wage - or they will end-up one day retired in abject poverty without a pension to sustain them. Or, perhaps long before, these are the families who join the Poverty Threshold and yet keep working.)

The additional costs of a MW around $11/12 an hour has a minimal impact upon costs that most state economies can afford to assimilate. Those that cannot, for good reason, might be exempted. We will have to manage nationally the administration of a minimum wage.

And why not, I ask. We have a National Income Tax that no one escapes, so why not regulation of a Minimum Wage? Because of a Replicant Congress that will fight tooth-'n-nail against it.

I thought that too. So, click on this link: Us minimum wage map.

Do explain the differences and regardless of them, they are all well below the "recommended value" ...

Agreed, but the intent of the minimum wage is not to compete amongst states to attact businesses but to pull people out of the Poverty Threshold.

It is NOT responding to that goal - not while nearly 14% of the population remains incarcerated there. (That, btw, is 45M men, women and children or also the population of California and Wisconsin combined.)

I agree, so what do you want to do about it? Start an international trade-war by blocking foreign imports "to save American jobs". Go ask anyone working at Boeing or Caterpillar if that's a good idea.

We must bring up the MW all by our lonesome selves. We need first to raise the MW and (perhaps even more importantly) get those people the post-secondary education that they need badly.

I saw on French TV yesterday an interesting statistic by which fully a third of all employment was now permanently self-employment. (Substantiated here by Pew Research) The nation has become "UBERized".

Which is OK, I guess - but of the revenues that UBER-workers (and their ilk earn) earn, how many have in addition to pay-rate salaries contributions to Pension or HealthCare Insurance? (I can't find that answer and would very much like to do so ...)
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Inflation is a general price-phenomenon. So, yes, it enters mainly into the calculation? But there are also other elements - principally the cost of housing (rental or ownership). Other basic costs such as food, clothing, gas, electricity, etc. do not have major differences affecting the cost-of-living.

Evidently, not all costs are the same everywhere. The rent of an apartment in NYC is incomparable with that of, say, downtown Des Moines. (Never did understand why that city was named after "some monks".)

I'm no professional in the matter of setting Minimum Wages, but I am an economist and I maintain the US needs a higher one. Especially since there exists a tendency towards self-employment that actually depends upon companies that higher self-employed individuals to lower costs. UBERization is a classical example.

Of course taxi-fairs from UBER are less costly, because so are overheads. But, does that mean that UBER has an irreproachable right to employ low-cost drivers who never earn enough to pay for life's essentials (food, housing, etc.) PLUS social security and pensions? (From a recent French TV program about the phenomenon of self-employment in America, I learned what I am writing here - so maybe the French reporter got it wrong?)

Without doing raising MW-levels, we are clearly impoverishing the self-employed. (Yeah, I know, it IS better than "unemployed". But not by much ...)

 

Found this list: STATE MINIMUM WAGES | 2016.

Some states conform to the Federal MW of $7.25/hour*. In fact, many are above that rate but not nearly enough. The MW for any state that want's to assure its residents are covered by a rate at that of the Poverty Threshold would have an hourly rate of $11.50/hour.

There are two states that don't have a Minimum Wage (Federal law or not) but not the two I cited previously.

Anyway, $7.25/hr is ridiculous in today's economy - it amounts to $15K per year in country where the Poverty Threshold (family of four) is at $24K, which is more than a third less ...
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Currently, no I do not, but I have at times in the past had to make do with an income much below the poverty level. Are you claiming I was a slave during those periods?

The Federal minimum wage law applies uniformly to ALL States, including Georgia and Wyoming.

Have you any evidence the Minimum wage is not regulated? Is 'Replicant' the word you meant to use? I have no idea what it is you're trying to imply other than it obviously is meant derogatorily.

The differences are easily explained, the Federal minimum wage is just that, the minimum wage. That minimum applies to all States, but does not prevent State or local governments from setting a minimum wage higher than the Federal minimum wage.

The problem is that raising the minimum wage results in consequences that need be taken into account. If the increase is too great it may result in some businesses having to lay off some employees to remain profitable, others may be able to afford the increase but may also lay off some less needed employees in order to meet the wage demands of more needed employees who see their value needing to be adjusted upwards as a result. In addition to all that, the number of those who rely partly or entirely on government aid will increase as well as their cost to government (those who remain working and are net tax payers).
I was totally unaware of there being 45 million men, women, and children in jail. Where did you find that data.

Not at all, I welcome competition and better and cheaper products.

I think we'd fare much better by lowering cost of living, MW, debt and inflation until we become competitive with the rest of the world again.

Should that be called self-incarceration? or a slave unto ones self?

 

OK, so this:
*I could care less that the MW is conspicuously below the Poverty Threshold level of $11 dollars an hour in all the states of the nation at present. Only the states of California and the city of New York will be increasing the MW to $15/hr by 2018
*There are still two states that have none, and it's against the law. And finally,
*Nobody gives a damn about the impoverishment happening below the Poverty Threshold in the one of the richest nations on earth.

Response to the above please, because otherwise your comments are nitpicking ...
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The Federal minimum wage law applies to ALL States. None are exempt.

Two MW jobs would result in 30K per year. How about a Federal law requiring highest paying jobs give preference to hiring persons with large families, leaving lower paying jobs to be filled by single persons or couples with no children or dependants?

 

Simply stating the facts is not nitpicking.

The Federal minimum wage is $7.25 an hour while the poverty level for an individual is $11,880 per year or $5.70 per hour. Are you suggesting the minimum wage should be set to an amount which would entice people to have 2 children or simply to subsidize those who make or made poor decisions?

You keep persisting that there are two States that have no minimum wage, and that is absolutely false. The Federal minimum wage applies to each and every State, but allows for States to impose a minimum wage which exceeds that set by Federal law.

One of the richest nations on Earth?
The U.S. GDP for FY 2016 was $16.5 trillion according to the government who also reports the debt owed at the end of FY 2016 to be $19,573,444,713,936.79 an increase of $1,422,827,047,452.46 from FY 2015.
While inflation may make perpetually increasing government spending and debt appear sustainable it does so only by reducing the ability of a vast majority of the population to provide for their own needs and wants during their life span. Of course we can content ourselves knowing that our debts will be passed on to our children and their children to attend to as best they can, if they can. But that's their problem not ours...right?