The employer doesn't have to make any threats because it's the unapposed "market" that provides the downward force on compensation. The individual is helpless when it comes to the downward force on compensation due to market pressure. Only by joining together in "unions" were the workers able to apply a counteracting upward force against the market pressure. Unfortunately along with the very positive economic aspects of unions when it came to counteracting the downward force on compensation from market pressure there was also criminal corruption in the unions. Instead of addressing the criminal corruption of union leaders Republicans, and many libertarians, targeted the destruction of the unions for the benefit of the employers. They threw out the baby with the bathwater and we've witnessed the result of that campaign to destroy the unions over time. When we had strong unions there was less poverty, far better compensation across the board, and the US economy boomed. With the demise of the unions we've seen compensation decline dramatically as the market forces that drive down compensation are unopposed. If we had strong unions (without the corruption) then compensation would be higher, poverty would be lower, and the economy would be thriving today but we've gutted the unions. If the unions were strong enough there would be no necessity for a minimum wage at all but they're not because of decades of union-busting legislation predominately coming from Republicans.
Walmart has the highest number of employees in the U.S. so knowing that, this is a good example to discuss increasing minimum wage.
Correct. The employer is not making any threats, thus the employer isn't coercing anyone. 2.6% of American workers make minimum wage. Why don't employers pay the other 97.6% of workers minimum wage? Why aren't these other 97.6% of workers helpless?
1. He will if he can increase the price of the products 2. If the business is cutting zero margin from the labour unit, the business represents a hopelessly inefficient use of capital.
This has been answered already Longshot. You have been given your lesson in basic economics, now is time for you to learn the lesson.
I didn't see an answer to this question. Why don't employers pay the 97.6% of workers minimum wage? Isn't there an unequal bargaining position?
And why are consumers suddenly willing to pay a higher price for the same good? Thought experiment for you: What do you think would happen to the $7.25/hour worker if the minimum wage was raised to $200.00/hour?
1. Because of scarcity of alternatives. Its called demand elasticity, look it up 2. Massive inflation, obviously. What do you think would happen?
Because the minimum wage is too low? I don't think you understand my question. Let me rephrase. The minimum wage is lowest price that an employer is allowed to pay a worker. They are not legally required to pay a worker any more than the minimum wage, yet 97% of workers ARE paid more than this rate. Why are employers paying more than they are legally required?
Of course I understand your question. You don't seem capable of accepting its a dumb question nor of understanding the answer. People can't sustain themselves on the minimum wage and so will not work for it. Employers still need the labour so drive the price up. It doesn't mean the price is driven up to a level commensurate with sustaining the employees lives. It just picks it up to a point where there are marginal benefits to the employee to enter the contract. Would you please explain why an 8yo worked 19 hours a day for 3 pence in the industrial revolution?
Finally! Yes, employees pay 97% of workers more than the minimum wage because they are competing for these workers. Because these workers bring value to their businesses. Additionally, an employer won't pay more than the value contributed, else he would be losing money. If the minimum wage is higher than the value contributed, the employee will be released. I have already answered this question: to earn money.
In the past minimum wages jobs was for kids still in school and they were mostly part time jobs. Today, due to so many manufacturing jobs and other jobs that didn't require a college degree leaving the U.S., people have no choice but to take these minimum wage jobs to survive. It is no longer kids in those jobs but adults with families to support. There is a problem with minimum wage when Walmart has the most employees in the U.S. and gets away with paying this wage. If Walmart did not put their CEO's pay and their stock holders profit margin as their top priority and gave their workers some of that large profits they make every year, our economy would improve as people will spend more money.
Market compensation is established by "all employers" as a group so effectively all employers are exerting coercion. Paying "minimum wage" generally creates a negative connotation for an employer so many pay just a few cents more to avoid that negative connotation but you miss a more important fact. Somewhere between 20% and 40% of all employees don't earn enough in compensation to provide for their basic support and comfort. That is a staggering number and that number worsens every year. Since the Recession of 2008 middle income wages (middle quentile) has dropped by up to 7% in some states and is still going down as more wealth if being funneled to the wealthy owners of enterprise.
These employers are not threatening violence, so no, they are not coercing anyone. It sounds like people might be better off becoming an owner of enterprise rather than working for wages.
What has that got to do whether the wages are sufficient to live on? As mentioned so many many time before, you are ignoring price inelasticity of the production and absorption from the existing profit margin. This why the real historic empirical evidence does not bear out your theory. So you are alright with 8-yo's working 19-hour days are you? Because they might be desperate enough to do it and there's more profit to be made from exploiting them?
It has nothing to do with whether wages are sufficient. If a person thinks his wages aren't sufficient, he should seek another employer or start his own business. Yes, you have talked about elasticity, but an employer will not keep an employee who costs more than the value he contributes. Personally, I think a parent in this day and age who has their child work 19 hour days is not acting in the best interest of the child.
ok. Mathematics has shown job growth, or no change in employment, after minimum wage increases. So, your math is not equating to reality.
Like that 8-yo kid working 19 hours in a factory should have just started his own business, huh? You seem to have grown up in a very spoiled environment, as you don't seem to grasp the reality that others simply don't have the choices you enjoy. OK - you obviously don't have the education to understand these things, lets just leave it at that. The choice was the child working or the child starving. Tell me, which of those choices would a responsible parent make?
The economic reality is that an employer will not employ someone who costs more than the value he contributes. By pricing people out of the market, minimum wage dooms them to unemployment. I don't see why you want to punish the most disadvantaged workers and prevent them from acquiring the job skills they need to raise their productivity.
Not really happen? It does really happen. Employers don't employ workers who costs more than the value they contribute. That's the reality.
Nice article, but it doesn't gives examples of employers employing workers who cost more than the value they contribute.
