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Old 09-09-2008, 09:21 AM   #41
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This is the argument for the Earned Income Credit, which I think has merit. I honestly haven't given it the study time to fully know whether it's the right approach or not, but it's intended to give some help to those who need it without the ill affect on market forces (i.e. wage pressures, etc.).
Good points Gardnr. I get so busy with the mechanics of my taxes that I tend to skim over the intent of some of these items (like the EIC) that are just automatic based on the numbers (no decision required). At a glance, it does seem to address the issue better than an across the board min wage.

And it gets to my real point in any discussion like this. People don't stop to define the problem before they start in with 'solutions'. So, if we were to continue a big discussion on this, I would suggest that we need to first define:

what problem is it that we are trying to solve?

If we define the problem, would min wage look like a good solution? I'm very skeptical.

-ERD50
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Old 09-10-2008, 05:20 AM   #42
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'Minimum Wage. Eliminate it, or get rid of it...?*'
ERD50, you succeeded!

I guess my question is how is putting a floor on wages different from putting a floor on grain or milk prices, or the current attempts to "prop up housing prices"? Multiple wrongs don't make a right.. but it's too bad to see low-wage workers being made out to be the only ones who should "suck it up" and face the full brunt of a pretty disadvantageous global wage market, at the same time that the US maintains other protectionist and interventionist strategies.

If the problem is "economic pain and instability in the low-to-middle class due to income inequality" then there are other tools for addressing that, but the min. wage is still one possible tool. It doesn't sound like the proposed increases are going to go very far in that direction, though.
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Old 09-10-2008, 07:58 AM   #43
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ERD50, you succeeded!

I guess my question is how is putting a floor on wages different from putting a floor on grain or milk prices, or the current attempts to "prop up housing prices"? Multiple wrongs don't make a right.. but it's too bad to see low-wage workers being made out to be the only ones who should "suck it up" and face the full brunt of a pretty disadvantageous global wage market, at the same time that the US maintains other protectionist and interventionist strategies.
I hope this doesn't scare you ladelfina, but you apparently missed my post #22 (that's OK, I know we have both been 'busy'). Seems we think alike on this issue:

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Originally Posted by ERD50 View Post
And before anyone throws out that straw man, no, I'm not in favor of govt subsidies or industry specific tax breaks to business. Two wrongs don't make a right.

-ERD50


But in the post you quoted I specifically said that *this* thread is about min wage, *not* those other issues. I could rail on those also. Maybe someone should start a thread on it?


Quote:
If the problem is "economic pain and instability in the low-to-middle class due to income inequality" then there are other tools for addressing that, but the min. wage is still one possible tool. It doesn't sound like the proposed increases are going to go very far in that direction, though.
Yes, min wage is a possible tool. I'm not certain that it is an overall positive though. Seems like a carpet-bomb approach to me. Have any evidence that it achieves the intended (unstated) goal?

edit/add: I took another look at the link Martha provided: http://www.epi.org/minwage/epi_minimum_wage_2006.pdf
it strikes me as very 'fluffy' esp for economists. Lots of opinion ('we believe') and 'most', 'some', 'little' wiggle words. Nothing quantifiable that I could see. No references, no data. Not convincing at all, sorry. If this is the best someone can do to support min wage, it speaks volumes against it.


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Old 09-10-2008, 09:30 AM   #44
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I found this site but am too tired to read any of it:
Supporting minimum wages: research, reports, sites
There are materials supporting both sides.
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Old 09-10-2008, 10:10 AM   #45
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I found this site but am too tired to read any of it:
Supporting minimum wages: research, reports, sites
There are materials supporting both sides.
Thanks ladelfina, I will try to wade through some of those later. I'll keep an open mind, but the fact that the url of that site is 'raiseminwage.org' isn't exactly filling me with confidence regarding lack of bias on their choice of articles.

For a very quick reader's digest style note, I found this in wiki:

Quote:
Economists disagree as to the measurable impact of minimum wages in the 'real world'. This disagreement usually takes the form of competing empirical tests of the elasticities of demand and supply in labor markets and the degree to which markets differ from the efficiency that models of perfect competition predict.
So I'm going to fall back to my earlier statement. Since enacting a min wage is an action, I feel it is up to those suggesting the action be taken to demonstrate that there is a quantifiable benefit. From what I have read so far, there does not seem to be much agreement that there is a clear benefit. But I'll keep looking.

Oh, and also in wiki, they site several surveys of economists and min wage does not get much support. So the 'hundreds of economists' that Martha linked that support it is meaningless, there are many more against it.

I was going to make an analogy, but since we are not in the SoapBox, I'll let it pass...

thanks - ERD50
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Old 09-10-2008, 10:18 AM   #46
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One more viewpoint on this from me. If the case is made that some low wage workers do not have enough 'pull' in the market ( a possibility), I'd prefer to see that problem addressed, rather than carpet-bombing all low wage workers with money.

An analogy:

Let's say a tire manufacturer was somehow able to create a monopoly for its products. W/o competition, their product and services would likely be substandard, and prices would be high.

Three methods to deal with this:

1) Have the govt take steps to return a free market atmosphere to the tire industry.

2) Provide a rebate to consumers, every time you buy a tire, the govt will give you $20 to offset the problem.

3) Do nothing, monopolies eventually implode.

I see min wage as #2. It does not address the root problem, and is a 'one size fits all' solution, that penalizes some, and benefits others that did not need it. #1 is fine with me if done carefully. #3 probably works, but it can take a long, long time.

-ERD50
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Old 09-10-2008, 10:41 AM   #47
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ERD50,

You might want to clarify what you mean by "quantifiable benefit". Is that a utilitarian notion of "greatest good for all" or "net positive economic benefit". Or a Rawlsian notion of "greatest benefit for the least advantaged members of society"?

I'm just hypothesizing here, but the minimum wage may not have a net positive economic benefit, but it may have a Rawlsian benefit of providing a positive benefit for the least advantaged. And if one goal of our social programs is to support (to a certain extent) the least advantaged, then minimum wage just may prove to be the most efficient (least damaging) method of encouraging work. I'm not an economist, so I don't know if that is true though.

In other words, it may be cheaper for society as a whole to fix prices in the labor markets and implicitly provide "welfare" for the least advantaged - those that can and will work anyway. Contrast this with unbridled labor markets or a labor market with a very low minimum wage, and you may have workers who, on the margin, decide not to work, and instead increase their share of some welfare allotment.

From a policy perspective, it may make sense to "price discriminate" when fixing prices in the labor market. I think others on this thread have suggested that some state min. wage laws allow "price discrimination" by exempting those under 18 and/or part time workers and/or certain job types from min wage laws. This would be more efficient than a blanket min wage law that might price some labor out of the market.
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Old 09-10-2008, 11:39 AM   #48
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FUEGO, good point about welfare benefits. If min.wage jobs can't keep a family above the poverty level, then gov./we/taxpayers end up chipping in with food stamps and other services. That's what disgusted me with Wal*Mart when they went about officially counseling their workers on how to apply for Medicaid(!) because what they paid them was so low. And of course if basic welfare is 'competitive' with lower-end wages, there's not a lot of incentive to take lower-end jobs, esp. if someone has kids at home.
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Old 09-10-2008, 11:51 AM   #49
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Thanks, and I'd like to throw out that I'm not necessarily for or against minimum wage laws - however I would like to see some evidence as to the costs and benefits of these laws as I tend to be skeptical of interferences with the market. Although I do support interference where there are market failures.

If we take as a premise that some level of welfare benefits are going to be provided, then let's do it in the "least bad" (economically speaking) manner we can. It seems like this might be by incentivizing work/productivity either through higher minimum wages (and discriminate where we can) or through the earned income credit.

Ladelfina, I have to disagree with you about walmart though. They were trying to help out their employees to the extent possible by encouraging them to take advantage of government programs that they qualify for. Their employees' wages are set by the labor market and are competitive. Walmart was doing what any employer should do - help their employees out where they can.
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Old 09-10-2008, 11:59 AM   #50
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Thanks FUEGO, I should clarify:

Yes, I am talking about overall benefit to the low-wage earners. You can call me a bleeding heart liberal if you want

That is why I'm looking for evidence. One of the debates that economists have is, does a min wage end up reducing the total number of low wage jobs, and does this create more problems than it solved? If it does, then maybe we didn't help the lower-income wage earners on average?

To ladelfina's post above - I think it is a tough call. Remember, the higher wage costs are reflected in the products, and poor people spend all their money on the basics. IOW, that increased product cost is not a 'progressive tax'. But, social programs are paid for mainly from progressive taxes. So which is really better?

I lean towards providing the social programs for those who really need it, rather than the broad brush of a min wage.

With Walmart, there is the argument ( I don't know if it is valid or not), that their lower prices have done more to help the poor than any negatives of low wages/benefits for some employees. I don't know.

Again, the person proposing the action of a min wage has the burden of proof.

-ERD50
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Old 09-10-2008, 12:13 PM   #51
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Thanks FUEGO, I should clarify:

Yes, I am talking about overall benefit to the low-wage earners. You can call me a bleeding heart liberal if you want
You won't see any name-calling from me. I think there is a place in our society for helping out some folks to a limited extent. But I also consider myself a conservative fiscally. I just wish we would waste our money on the right things.
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Old 09-10-2008, 01:11 PM   #52
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The moderators appreciate your courtesy, Fuego.
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Old 09-10-2008, 01:32 PM   #53
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The moderators appreciate your courtesy, Fuego.
Well, I certainly appreciate the moderators appreciation as well. Now if I could just get some appreciation in certain asset classes in my portfolio...
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Old 09-10-2008, 01:37 PM   #54
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Yeah, I would appreciate that as well.
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Old 09-10-2008, 02:53 PM   #55
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Thanks FUEGO, I should clarify:

Yes, I am talking about overall benefit to the low-wage earners. You can call me a bleeding heart liberal if you want

-ERD50
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You won't see any name-calling from me.
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The moderators appreciate your courtesy, Fuego.
whoooops, I hope my little lame attempt at humor wasn't misunderstood there. Or maybe I am misunderstanding your reply? In either case, I'm sorry, I don't want to side track this thread with this.

I was poking some fun at myself there. I think a lot of people see me as the anti-liberal, so it was meant to be a joke.

Even at that, I don't think of some of these labels as 'name calling'. A while back, someone got on my case for referring to some other posters as liberals or their liberal views. It wasn't meant as 'name calling' just a shorthand description of their viewpoint. IIRC, Martha was one that said something to the effect 'I'm proud to be known as a liberal'. And I'm glad we live in a country where we can express, discuss and even argue our differing viewpoints.

Anyhow, I agree with the rest of your comments.

-ERD50
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Old 09-10-2008, 03:12 PM   #56
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whoooops, I hope my little lame attempt at humor wasn't misunderstood there. Or maybe I am misunderstanding your reply? In either case, I'm sorry, I don't want to side track this thread with this.

I was poking some fun at myself there. I think a lot of people see me as the anti-liberal, so it was meant to be a joke.
I figured it was sarcastic on your part! I hadn't stereotyped you as an "anti-liberal" though - not sure if you just aren't trying hard enough or if I'm just not paying attention...

Nothing bleeding heart in what you wrote here or what I have written as far as I'm concerned.
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Old 09-14-2008, 11:13 PM   #57
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I found this site but am too tired to read any of it:
Supporting minimum wages: research, reports, sites
There are materials supporting both sides.
Quote:
Originally Posted by ERD50 View Post
Thanks ladelfina, I will try to wade through some of those later. I'll keep an open mind, but the fact that the url of that site is 'raiseminwage.org' isn't exactly filling me with confidence regarding lack of bias on their choice of articles.
OK, poked around that site a bit - this report seems typical of what I find in these arguments:

Opposing the minimum wage: articles and posts

http://www.fiscalpolicy.org/FPISmallBusinessMinWage.pdf

Quote:
This analysis does not prove that increasing the minimum wage will boost employment growth over what it otherwise would have been. But it is clear that the prediction that an increase in the minimum wage will result in adverse employment outcomes has not been validated.
Hmmm, pretty hard to tell if they were able to adjust for all the variables that would impact a study like this. But they seem to say that since you can't prove we are wrong, it is good enough. And let's just ignore that pesky supply/demand thing economists talk about - we want to help people! Again, I say that burden of proof lies on the one suggesting the action.

Quote:
In fact, this analysis suggests that small employers may benefit from a higher minimum wage because of positive effects on worker retention and productivity and savings on recruitment and training costs.
Hmmm, so the govt knows better than the average small business owners? Heck, the govt is so smart that even a one-size-fits-all strategy on wages is better than what these small business owners might come up with.

They are saying that an employer really does not know how much to pay employees in order to get the most out of them, considering retention, training, motivation, etc. I'd like to give the entrepreneur a bit more credit than that - and if they don't have it, it is their problem and their business will suffer. But, let's take it to it's logical conclusion - why stop with wages? The govt should tell this owner what flavors of ice cream to offer, what size tables to have, the color of the table cloth, what the business hours should be, and how they should price their products... after all, the business owner is too stupid to figure this out w/o help from the govt.

I'll refer back to samclem's comment on why not make min wage $100? Yep, I know - you will say 'don't be silly' - but what is the diff? If a min wage is going to help reduce the number of poor people, why wouldn't $100/hour help make everyone rich? Why not? - because it doesn't work.

Now, if someone can make a case that the low wage worker is at a disadvantage in bargaining power versus low wage employers - then I suggest we figure out how to equalize that, rather than band-aid it with a wage #. Otherwise, the problem will just crop up in some other form.

Maybe there are better articles with more compelling arguments in there, but based on the split that wiki refers to, I doubt it.

-ERD50
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