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GOP proposal to raise minimum wage

Long, long overdue, and way below inflation and standards of living. So it was a nice surprise to initially read Sen. Rick Homosexual-Marriage-Will-Lead-To-Fucking-Animals Santorum (R-PA) lead the charge in raising the minimum wage $1.10 to $6.25/hour. This will all be added to that lovely bankruptcy bill (which is in another thread):

http://www.kansascity.com/mld/kansa...cs/11061008.htm
(Knight Ridder free subscription req'd)

But those darn GOPers always have catches don't they? Welp, here ya go!:

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Licensing Sweatshops: While a $1.10 per hour minimum wage increase by itself would help 1.8 million workers, Santorum includes a poison bill exempting any business with revenues of $1 million or less from regulation -- raising the exemption from the current $500,000 level. The upshot: while 1.2 million workers could qualify for a minimum wage increase, another 6.8 million workers, who work in companies with revenues between $500,000 and $1,000,000 per year, would lose their current minimum wage protection. And an even larger number of businesses, those with revenues under $7 million, would be exempt from fines under a range of other safety, health, pension and other labor laws. Essentially, the realm of unregulated sweatshops would be expanded and legalized under Santorum's bill. Killing Overtime: It gets worse-- the 40-hour work week would be abolished and companies would not have to pay overtime if they cut hours the next week. The proposal is called "flex time", but workers would have no say in the matter. Their hours could be rearranged, upsetting child care and other weekly routines, and companies would no longer have the deterrent of having to pay overtime as a way to encourage giving workers a regular weekly schedule. Banning State Minimum Wage Laws: But here's a kicker from a GOP supposedly dedicated to states rights. Santorum's bill would ban states from requiring employers to pay tipped workers with a guaranteed wage. Employers could pay tipped workers nothing and force them to live off tips, while states would be preempted from creating a higher wage standard for tipped workers. The federal Fair Labor Standards Act specifically guarantees states the right to impose higher wage standards than the federal law. One area where many states have a higher standard than federal law is for tipped workers, who are guaranteed only $2.13 per hour in wages under federal law and can be forced to credit their tips against the required federal wage level. Many states have a higher minimum wage for tipped workers or have abolished the so-called "tip credit" altogether and let workers keep their tips, without allowing employers to reduce their salary below the regular minimum wage level. With Santorum's bill as law, you would end up with a situation where small and even medium size restaurants and other businesses with tipped employees would be exempt from the federal minimum wage, and state governments would be barred from requiring employers to pay actual wages to tipped workers. Essentially, those workers could be hired for zero dollars and told they had to live only off tips, however little those were. The attack on the tip credit is bad enough, but the precedent of the federal government creating a MAXIMUM standard for wage regulation and restricting the right of states to create a higher standard is even more dangerous. Because of federal inaction, states across the country have raised their minimum wages -- Red State Florida raised theirs just last fall and indexed it to inflation -- and many more are thinking about it. (See the chart below) If Santorum and the GOP can push through a restriction on states' ability to raise standards for tipped workers, the next step could easily be a restriction on states being allowed to have ANY minimum wage higher than the federal level at all. The City Minimum Wage Precedent: Sound too far-fetched even for rightwing politicians? Well, after a number of cities began enacting city minimum wage laws, about a dozen southern and western states, including Florida, Louisiana and Georgia, passed legislation banning local governments from enforcing local minimum wages higher than the federal minimum wage level. Backed by the conservative American Legislative Exchange Council, these "minimum wage repeal acts" are the model for the national GOP going further and preempting state minimum wage laws, just as they recently preempted state class action laws and just as they have preemped state health care and environmental regulation. (See this post today on the full range of conservative's preempting progressive state laws). http://www.nathannewman.org/laborbl...ve/002263.shtml

Economic Policy Institute's analysis can be found here:

http://www.epinet.org/newsroom/rele...inimum_Wage.pdf

Corporate welfare anyone? Class warfare anyone?

$6.25 is a pretty crap wage!!!

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Originally posted by George Smiley $6.25 is a pretty crap wage!!!

indeed! so many ppl that are on it too!

anyway, that proposal seemed pretty crap.

I am always against minimum wage, I feel that the market is the best regulator for how much a job is worth.

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Originally posted by CyberneticAngel I am always against minimum wage, I feel that the market is the best regulator for how much a job is worth.

well, when the minimum wage is that low and a lot of companies still uses it then there is something wrong. but yeah, i agree with your idea.

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Originally posted by CyberneticAngel I am always against minimum wage, I feel that the market is the best regulator for how much a job is worth.

In principle I tend to agree with your statement as well. But unfortunately, the realities of our market is that it's not as good of a regulator as we'd all like it to be.

^^^ thats true, between government regulation and corporate colusion it is easy to see why a little regulation is nessesary. On the other hand the only time that i have actually worked for minimum wage I also recieved tips, I don't think that there are actually that many jobs filled by legal workers who this affects.

Companies dont pay anyone what that job is worth!! Companies pay the lowest they can get away with and with no regulation, they wouldn't even pay the paltry $5 they pay now!

America is already one of the worst countries in the west for poverty, and if you think that the market is the best regulator for how much a wage is worth then America will become even wrose than it is now (and now, no offence, but its pretty shit like the UK)

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Originally posted by MisterOpus1 In principle I tend to agree with your statement as well. But unfortunately, the realities of our market is that it's not as good of a regulator as we'd all like it to be.

I'm against minimum wages as well, but you suggest that the market isnt as good a regulator as we'd like it to be? I'm really not sure how we can see a market failure in the labour market (and therefore justifying federal regulation). From what I know most minimum wage jobs are at your local diners and supermarkets etc etc.. correct me if i'm wrong, but these markets often produce competitive labour markets (as in you can easily leave one workplace and move to another diner joint if you so wish). If this is indeed the case then a competitive labour market does produce the most efficient wage, and setting a minimum wage is merely distorting the market and putting people out of work.

Sweden for example have no minimum wage tho, and a person working at mcdonalds in sweden would earn like twice as much as for the same in north america.

Sweden have strong unions tho, so thats like a "mini guvernment" or whatever

but no guvernment regulations

Wow, this is just like the "clean skies" initiative. A raise in the minimum wage is badly needed, especially since it hasn't risen in years despite inflation. Those strings are ridiculous though, especially since it would ban my state from setting a living wage, meaning the minimum would almost be cut in half for many people. I say raise it with almost no restrictions and have small business incentives to help compensate.

On the idea that the market sets fair prices, I would have to disagree. Personally my employer does a good job as do many, but in the case of many others look at the restrictions that have destroyed the power and numbers of unions in this country, the astronomical CEO to employee earnings ratio that has skyrocketed since the 1980s, outsourcing and the use of cheap third world labor that has virtually replaced all production here for pennies on the dollar.

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Originally posted by wolverine16 On the idea that the market sets fair prices, I would have to disagree. Personally my employer does a good job as do many, but in the case of many others look at the restrictions that have destroyed the power and numbers of unions in this country, the astronomical CEO to employee earnings ratio that has skyrocketed since the 1980s, outsourcing and the use of cheap third world labor that has virtually replaced all production here for pennies on the dollar.

Labor unions are just as bad as artificial wage controls, While on the one hand they have acomplished much good in the past they are now mostly antiquated. Controls that regulate the wage a company can pay you are one of the biggest factors in so many American jobs moving overseas. If you represented the fabled "widget" makers would you rather employ workers here in the US where you are forced to pay them a minimum wage, and may soon be forced to provide them healthcare? Or would you chose to move your operation to another country that will allow you to pay whatever wage that counrties labor market supports? I suppose there is a third alternative, you could always hire illegals to work for you in the US, hiring illegals in many ways represents a segment of the US labor demands that would have a hard time being meet with the current level of government interferance. Jobs that otherwise would not be profitable can be filled by employees that cannot complain to the government about working conditions and wages. Does this mean that it is right to ship jobs overseas to the highert bidder or to hire illegal aliens here in the US? No, of course not. It is truly a shame that American companies feel that the current US labor market will not support their business, and something should probably be done about it. In the end, however, it is doubtfull that increased wage controls could do anything but hasten the flight of US jobs to weaker economies.

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Originally posted by George Smiley Companies dont pay anyone what that job is worth!! Companies pay the lowest they can get away with and with no regulation, they wouldn't even pay the paltry $5 they pay now!

So are you saying that these jobs are not worth five dollars? Because of the relativly low unemployment in the US there are very few segments of the US economy that are suffering a glut of excess workers. Wages only go down when business is suffering and unemployment is high. This is basic supply and demand, the foundation of the capitalist system. (Of course collusion/ monopolistic tactics could also play a role, but in the US we have done a fairly good job of limiting this sort of thing since the rise of labor unions)

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America is already one of the worst countries in the west for poverty, and if you think that the market is the best regulator for how much a wage is worth then America will become even wrose than it is now (and now, no offence, but its pretty shit like the UK)

Well lets see, the US unemployment rate was UP to 5.4% so lets see, compairing that to other Western countries we have Germany at12.6%, the world average is 6.1% and in the developed economies (which include the EU-25) there was only a slight decline from 7.4 to 7.2 per cent (these last couple of numbers are from 2003 to 2004) I hardly think America ranks as "one of the worst countries in the world"

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Originally posted by CyberneticAngel So are you saying that these jobs are not worth five dollars? Because of the relativly low unemployment in the US there are very few segments of the US economy that are suffering a glut of excess workers. Wages only go down when business is suffering and unemployment is high. This is basic supply and demand, the foundation of the capitalist system. (Of course collusion/ monopolistic tactics could also play a role, but in the US we have done a fairly good job of limiting this sort of thing since the rise of labor unions) Well lets see, the US unemployment rate was UP to 5.4% so lets see, compairing that to other Western countries we have Germany at12.6%, the world average is 6.1% and in the developed economies (which include the EU-25) there was only a slight decline from 7.4 to 7.2 per cent (these last couple of numbers are from 2003 to 2004) I hardly think America ranks as "one of the worst countries in the world"

Unemployment in Sweden is 5.5%, basically the same as in the US (i also think that you count your unemployed different which make it seem lower?). Wages for low level jobs there are at least twice as hight as yours, which proves that your logic doesnt work.

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Originally posted by CyberneticAngel Labor unions are just as bad as artificial wage controls, While on the one hand they have acomplished much good in the past they are now mostly antiquated. Controls that regulate the wage a company can pay you are one of the biggest factors in so many American jobs moving overseas. If you represented the fabled "widget" makers would you rather employ workers here in the US where you are forced to pay them a minimum wage, and may soon be forced to provide them healthcare?

Unions. Good idea on paper. Abysmal in practice. Wildly corrupt and great at demotivating a work force. Not to mention an extra "tax" for those who have to pay into them. All in the name of collective(dirty word) bargaining.

union intervention are only justified in markets where a firm has monopolistic power over the labour market, and not in competitive markets. I'll give you an example of such a market.. Take utilities for example.. and in this case, water supplies. They are a natural monopoly with usually only 1 firm providing a service. However, there are many people with qualifications in water/catchment management etc etc. Since they have nowhere else to work but the utilities company, then they are subjected to being exploited by their employers.

Actually... I lie.. Unions have a place in competitive markets to ensure that people have safe workplaces and are not subjected to explotation/harassment etc etc... They have no place in wage negotiations. As Shakka just mentioned, they work great in theory, but are widely corrupt.

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Originally posted by St_Andrew Unemployment in Sweden is 5.5%, basically the same as in the US (i also think that you count your unemployed different which make it seem lower?).

The statistics have left out those who aren't working and have given up trying to look because they can't find anything. Our numbers would be quite a bit higher if they were included.

Re: GOP proposal to raise minimum wage

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Originally posted by MisterOpus1 Long, long overdue, and way below inflation and standards of living. So it was a nice surprise to initially read Sen. Rick Homosexual-Marriage-Will-Lead-To-Fucking-Animals Santorum (R-PA) lead the charge in raising the minimum wage $1.10 to $6.25/hour. This will all be added to that lovely bankruptcy bill

Thakfully this got turned down. It's not like we really need to put those that are currently making minimum wage out on the street due to this, because that's exactly what would happen to a significant majority of them (plus a few that are making a bit more than minimum wage).

Minimum wage in Ireland is Euro 7.65 per hour which equates to 10.25 US Dollars.....plenty of jobs here as well

Re: Re: GOP proposal to raise minimum wage

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Originally posted by DJMaytag Thakfully this got turned down. It's not like we really need to put those that are currently making minimum wage out on the street due to this, because that's exactly what would happen to a significant majority of them (plus a few that are making a bit more than minimum wage).

I keep on hearing this argument, but have yet to see any statistics supporting it. In periods where unemployment is approaching "natural" levels (i.e. the labour market is already stretched thin) is there any correlative evidence supporting the assumption that a rise in minimum wage will result in an increase in unemployment? Will $1.10 an hour really break the budgets of any businesses at all? Would sacking people in favour of paying them an extra $40 a week actually be profitable (considering the output that you're losing for the sake of saving such a comparitively small amount of money)?

Re: Re: Re: GOP proposal to raise minimum wage

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Originally posted by Renegade I keep on hearing this argument, but have yet to see any statistics supporting it. In periods where unemployment is approaching "natural" levels (i.e. the labour market is already stretched thin) is there any correlative evidence supporting the assumption that a rise in minimum wage will result in an increase in unemployment? Will $1.10 an hour really break the budgets of any businesses at all? Would sacking people in favour of paying them an extra $40 a week actually be profitable (considering the output that you're losing for the sake of saving such a comparitively small amount of money)?

It's much more than $40 a week, because you have to consider that the minimum wage workers that for go from $5.15 to $6.25 create a problem for those already having gotten raises in the past to put them up to $6.25. Are the $6.25 workers going to want raises so they aren't just another minimum wage worker? Hell yes! The end result is pushing up wages almost across the board for all employess, meaning that the former minimum wage workers are almost certain to be cut.

I can't cite statistics, but few economists would argue that higher minimum wages do indeed increase unemployment. If they don't create much unemployment, then product prices go up, thereby negating the increased wage.

There are studies that show that as minimum wage has gone up, minorities have had their unemployment percentages go up at a much higher rate that caucasian workers. I'll have to do some digging as to where I found that, but I've seen it several places.

Re: Re: Re: Re: GOP proposal to raise minimum wage

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Originally posted by DJMaytag It's much more than $40 a week, because you have to consider that the minimum wage workers that for go from $5.15 to $6.25 create a problem for those already having gotten raises in the past to put them up to $6.25. Are the $6.25 workers going to want raises so they aren't just another minimum wage worker? Hell yes! The end result is pushing up wages almost across the board for all employess, meaning that the former minimum wage workers are almost certain to be cut. I can't cite statistics, but few economists would argue that higher minimum wages do indeed increase unemployment. If they don't create much unemployment, then product prices go up, thereby negating the increased wage. There are studies that show that as minimum wage has gone up, minorities have had their unemployment percentages go up at a much higher rate that caucasian workers. I'll have to do some digging as to where I found that, but I've seen it several places.

There are also studies that demonstrate a marked benefit for the workers and an insignificant effect on the employers as a whole. And if there is a marked increase in minorities' wages vs. Caucasians, that is only because there is a much greater disproportionate number of minority workers in the lower wage bracket. IOW, it is not a direct tie to minority workers, rather than an actual direct tie to the low wages themselves.

Here's a passage that dispels many of those Cato-claims on minimum wage increases hurting businesses:

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Opposition to raising the minimum wage Opponents of minimum wage increases repeat the same misguided arguments against an increase. First, opponents allege that the market should set the minimum wage, not the government. Second, they claim that raising the minimum wage will cost many low-wage workers their jobs. Third, they contend that the minimum wage is not well targeted, with most of the benefits accruing to teenagers and families that already have relatively high income levels. These arguments are refuted in the sections that follow. The government's role in setting the minimum wage When it passed the Fair Labor Standards Act (FLSA) more than 60 years ago, the Congress decided that the federal government should set a minimum wage beneath which no worker's wages should fall. In the FLSA, Congress enunciated its goal to reduce "labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers."2 Federalism scholars frequently cite equitable income redistribution as a primary economic function of the federal government (see, e.g., Oates 1972, pp. 3, 6-8), and the minimum wage is precisely the type of policy that requires the uniformity of a national requirement. States are, of course, free to set minimum wage levels higher than the national minimum wage; 12 states and the District of Columbia have done just that. The Bush Administration and other policy makers have discussed a "state flexibility" proposal that would allow states with minimum wage rates of $5.15 an hour to opt out of future federal minimum wage increases. There is compelling evidence that some states would jump at the opportunity to opt out: seven states have no state minimum wage and two states have a state minimum wage that is lower than the federal minimum wage.3 (A "state" minimum wage rate applies to workers who are not eligible to receive the federal minimum wage because they are not covered by the FLSA.) Allowing states to opt out of the federal minimum wage would deprive millions of low-wage workers with a much-needed increase in their living standards. Such a loophole would, over time, erode—and ultimately eliminate—the national wage floor. If an opt-out were allowed, states might "compete" with one another to attract business by advertising their low wage rates. Such competition would force all businesses to pay lower wages, even those that wanted to adequately compensate workers by paying higher wages. Converting the minimum wage to an "aspiration" that all states are free to ignore would facilitate a "race to the bottom" that is bad for workers and for the nation as a whole. The effect of minimum wage increases on employment A common argument against raising the minimum wage is that wage increases will reduce employment because firms will be forced to lay off workers in order to compensate for the wage hikes. One particularly pervasive myth is that minimum wage increases hurt small businesses. However, as shown on the following pages, empirical evidence and new, more relevant economic models indicate that modest minimum wage increases have little to no effect on job loss. Traditional economic models fail to predict the employment effects of minimum wage increases. Standard textbook economic theory predicts that if the price of something increases, purchasers will demand less of it. Based on this theory, some economists instinctively oppose the minimum wage because they believe that raising cost of labor through a minimum wage increase will cause employers to hire fewer low-wage workers. The standard economic model, however, breaks down when it is applied to the low-wage labor market because: unlike the situation for other commodities, increases in wage rates can actually change worker behavior, uniquely changing the very nature of the "good" (i.e., labor) itself; firms and workers do not have "perfect information" about wage rates, worker productivity (assumed to be equal across all employees), and job opportunities; workers can negotiate wages and need not take the "market wage" as given; there are large transaction costs for workers (who are assumed to exit and re-enter the labor market instantaneously); and there are large transaction costs for employers (who are assumed to fill their job vacancies instantaneously) (see e.g., Bernstein and Schmitt 1998, pp. 33-36). Recent empirical research finds that employment has not fallen when Congress enacted previous increases in the federal minimum wage or when states raised their minimum wage above the federal level. The traditional economic model does not explain the labor market response to modest increases in the minimum wage. Newer economic models of the low-wage labor market do, however, explain why there is little to no job loss associated with an increased minimum wage. These more sophisticated models make more reasonable assumptions: employers are free to set wages because they know workers face substantial costs while unemployed; employers pay their workers a lower wage than the workers would earn in a competitive market with perfect information; workers who are paid higher wages have lower turnover; and lower turnover leads to more experienced workers and higher productivity, therefore lowering recruiting and training costs for the employer (see, e.g., Bernstein and Schmitt 1998, pp. 40-42). Employers frequently oppose an increase in the minimum wage, claiming they will have to lay off workers if the minimum wage increases. However, this has largely been untrue in the past. While employers may experience higher costs after a wage rate hike, evidence suggests that these increased costs may be offset by other benefits such as lower employee turnover, lower recruiting and training costs, higher employee productivity, decreased absenteeism, and high worker morale (Holmes and Zellner 2004, pp. 76-77; Sklar et al. 2001, pp. 76-79; Bernstein and Schmitt 1998, pp. 40-42).4 Moreover, employers pay their workers less than the actual value of their work, and the difference between the value of the employee's work and the employee's salary is part of an employer's profit. Over the last three years, corporate profits in the United States have expanded by 57.5%, while private wage and salary income has actually decreased by 1.7% over the same period (Price 2004). Employers are likely to retain their workers after a minimum wage increase given this recent surge in corporate profits and the likelihood that the value of their employees' work is greater than the salary they are paid. Modest minimum wage increases do not result in job loss. The quality of empirical minimum wage research has increased significantly over the past decade because economists have been able to conduct "pseudo-experiments" based on wage differences between states with higher state minimum wages and states with the federal minimum wage. This natural variation allows economists to isolate the impact of a wage increase instead of relying on economic theory to estimate what the impact of a wage increase might be. This extensive empirical research shows that the employment effects associated with a modest minimum wage increase are close to zero, and in some cases may result in modest employment gains: David Card analyzed the 1989-1990 federal minimum wage increase (from $3.35 to $3.80) and found that raising the minimum wage had no negative effects on employment (Card 1992, p. 36). A later survey-based study by David Card and Alan Krueger compared the employment effects of a 1992 minimum wage increase in New Jersey with the employment effects in the neighboring state of Pennsylvania and found that the New Jersey minimum wage increase did not lead to a measurable negative impact on employment (Card and Krueger 1994, p. 792). Card and Krueger subsequently confirmed their survey results with state government data and published their findings in a 2000 American Economic Review article (Card and Krueger 2000). In 1995, Card and Krueger reviewed seven analyses of separate minimum wage increases from across the country and found that there was an "absence of negative employment effects" and therefore "reasonably strong evidence against the prediction that a rise in the minimum wage invariably leads to a fall in employment" (Card and Krueger 1995, p. 389). Card and Krueger found "zero or positive employment effects for different groups of low-wage workers in different time periods, and in a variety of regions of the country" (Card and Krueger 1995, p. 389). EPI's analyses of the federal minimum wage increases in 1996 and 1997 came to similar conclusions, finding any employment effect was "economically small and statistically insignificant" and just "as likely to be positive as negative" (Bernstein and Schmitt 1998, pp. 4 and 33). The 1999 Economic Report of the President reviewed this body of research, finding "the weight of the evidence suggests that modest increases in the minimum wage have had very little or no effect on employment" (Council of Economic Advisers 1999, p. 112). In 2004, the Fiscal Policy Institute (FPI) compared total employment in states with a state minimum wage set above the $5.15 federal level to all other states. FPI found that aggregate employment in the higher minimum wage states increased by 6.1% between 1998 and 2004, whereas employment in states with only the federal minimum wage increased by only 4.1% (FPI 2004, p. 8). There is no evidence that, because the economy is currently experiencing a slow recovery, this is a bad time to increase the minimum wage. Historical experience shows that raising the minimum wage during periods of slow growth does not reduce employment. When the minimum wage was increased from $3.35 to $3.80 during the economic downturn of 1990, a highly regarded analysis of that increase found that "there is no evidence that the rise in the minimum wage significantly lowered teenage employment rates" (Card 1992, p. 36). Finally, there is no evidence that an increase in minimum wages affects other non-wage characteristics, such as reduced employee benefits or increased prices. Moreover, even if there are minor job losses associated with an increase in the minimum wage, the research indicates that the benefits of increasing the wage far outweigh its associated costs as measured by job losses. Small businesses are unlikely to be hurt by modest increases in the minimum wage. Opponents of minimum wage increases also argue that an increase will disadvantage small businesses in particular by rendering them unable to compete and forcing them to lay off workers. Based on this argument, some have suggested that a small business opt-out is appropriate for any future minimum wage increase. Permitting any such piecemeal opt-out undermines the goal of the federal wage floor and erodes the effectiveness of the minimum wage. Furthermore, there is no reliable evidence that a modest minimum wage increase would force small businesses to reduce employment. In fact, available research is to the contrary. Not only does empirical research show a lack of employment effects during previous federal minimum wage increases, but FPI recently found that small businesses experienced higher employment growth in states with a minimum wage above the $5.15 federal minimum (FPI 2004, pp. 1, 8, and 11). Specifically, FPI found that, between 1998 and 2001: the number of establishments with fewer than 50 employees rose twice as quickly in states with a higher minimum wage (3.1% in higher minimum wage states versus 1.6% in states with the federal minimum wage); the number of employees in small establishments grew by 4.8% in higher minimum wage states but only by 3.3% in all other states; and small business annual and average payrolls grew faster in high minimum wage states (Fiscal Policy Institute 2004, pp. 11-12).5 Sklar et al. recently considered the impact on small businesses as well. They calculated the increased cost associated with raising the minimum wage to $8.00 as a percentage of net receipts (i.e., total receipts less payroll and benefits) by firm size and industry. The analysis found little variation in the cost of the wage increase relative to receipts across firm size and concluded that small businesses "should not be disproportionately affected by a minimum wage increase" (Sklar et al. 2001, pp. 81-83). Recipients of the minimum wage increase Some opponents have argued that the minimum wage is poorly targeted and does not benefit the working families who need it most. That contention is simply not true. The 1999 Economic Report of the President reviewed the empirical evidence and disputed this argument, stating that "most minimum wage workers are adults from lower income families, and their wages are a major source of their families' earnings" (Council of Economic Advisers 1999, p. 111) The income gains from an increase in the minimum wage flow primarily to the bottom of the income scale. For example, 35% of the income gains generated by the 1996-1997 increase went to the poorest 20% of working households and 58% of the gains go to the poorest 40% of working households (Bernstein and Schmitt 1998, pp. 7-8). Prior minimum wage increases have also raised the wages of minorities, who disproportionately earn at or slightly above the minimum wage (Bernstein and Schmitt 1998, pp. 5-6). Of those affected by the 1996-1997 minimum wage increase, 71% were adults (20 and older) and 58% were women (Bernstein and Schmitt, p. 6). Finally, "there is a nontrivial fraction of workers who spend substantial portions of their early careers consistently working in minimum wage jobs" and "there is an identifiable subpopulation of workers [namely, women, minorities, and the less educated] whose lifetime income and employment is likely to be associated with minimum wages" (Carrington and Fallick 2001, pp. 17 and 26).7 For these workers, a minimum wage increase raises their lifetime earnings potential. http://www.epinet.org/content.cfm/briefingpapers_bp151

More info. on minimum wage can be found here:

http://www.epinet.org/content.cfm/i...minwage_minwage

Something I sort of agree with Pat Buchanan on a bit. I say we raise tariffs on a lot of products and give small businesses incentives to help pay for an increase in the minimum wage. The reality is the U.S. is almost exclusively a service economy, because the vast majority of our production jobs have gone elsewhere at labor rates and in conditions that no one here could ever work in. Now we're even losing many service jobs. At work I just had to call someone in India to ask them about real estate taxes on a home in Florida. It's difficult for the market to set a fair wage when there is little diversity in the job sector and there is competition from other markets that offer completely unrealistic wages. These help to lower the wages that Americans must compete for. Considering minimum wage hasn't been raised in years, I cannot agree that the market sets a fair price, as many employees continue to work for that artificially set wage despite annual inflation. That means the market's costs are rising and wages for many people aren't. If you ever visit the West Side of Chicago or Humboldt Park, there's no way you can say there aren't hard working families that survive on minimum wage employment without tips. I'd also add that if the Swedish unemployment rate is similar to the U.S., the healthcare, education possibilities, food and unemployment benefits offered in Sweden are far more realistic to live on than in the U.S., not to mention the quality of life of those who live there and are employed in low wage jobs. I think the answer is to make the U.S. market more diversified again and encourage production to occur within the U.S. The more work opportunities that are available, the more sufficient wage employment opportunities will exist.

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Originally posted by wolverine16 Considering minimum wage hasn't been raised in years, I cannot agree that the market sets a fair price, as many employees continue to work for that artificially set wage despite annual inflation.

If you look at how many people work at wages above minimum wage compared to how few do, you'd have to say that the market DOES set a fair price. Some of my ultra liberal friends back in Wisco seem to thing that penny pinching capitalist pigs would make everybody work for 75 cents an hour in sweatshop conditions if the minimum wage were to be repealed. For that to be true would mean that EVERY job in America would be for the minimum wage, and we know that that isn't the case now.

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Originally posted by DJMaytag If you look at how many people work at wages above minimum wage compared to how few do, you'd have to say that the market DOES set a fair price. Some of my ultra liberal friends back in Wisco seem to thing that penny pinching capitalist pigs would make everybody work for 75 cents an hour in sweatshop conditions if the minimum wage were to be repealed. For that to be true would mean that EVERY job in America would be for the minimum wage, and we know that that isn't the case now.

Not everyone would get paid 75 cents/hr., but if there were no minimum wage instituted by law, I'd guarantee a lot of jobs that currently pay minimum wage would pay something less than that amount just the same way they're not going to pay employees the proposed new minimum level unless they have to by law. We're a long way form those days and much more advanced, but if you look at how things were during the Industrial Revolution before minimum wage laws, child labor laws and organizations like OSHA, Americans were working under those conditions, so I'd say there need to be some minimal regulation standards.

People get paid higher levels tham minimum wage often because of competition. For instance, if one law firm paid $5.15/hr. and other firms pay $17/hr, no one with the skills to have that job will want to work for less than 1/3 of the salary if they can get it elsewhere. With most low skill jobs leaving the country, those poeple that are not qualified to compete for higher skill service jobs are in competition with others outside the country who can fill the position for a fraction of the cost. That outside competition at the bottom end sets an unrealistic wage for unskilled workers, who have the only alternatives of being unemployed or gaining skills to compete for higher level positions. The latter essentially drives down the wages offered for more skilled positions, as more people compete over the same jobs.

When the economy is doing well, the wages for employees overall go up because the demand for new employees increases and companies must compete amongst each other for what supply of qualified people are available. When it is stagnant, companies have no incentive to compete amongst each other for workers. This is why I think the best solution is to diversify the economy and reinvest in domestic production, which provides more jobs for lower skilled workers while allowing industry access to our own markets and the competition amongst American companies that brings about higher wages. American workers greatly suffer due to trade deficits, so by keeping more jobs within the U.S., we could help both workers and many U.S. companies at the same time.

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Originally posted by wolverine16 I say we raise tariffs on a lot of products and give small businesses incentives to help pay for an increase in the minimum wage.

Raise tariffs... on a lot of products... Holy shit bro. Lets just knock our economy back a few decades. When you suggest such moves all you do is artifically distort markets.. Taking economic surpluses away from consumers and put them into the hands of small business. In doing this you displace untold amounts of workers and provide incentive for these workers to be employeed in industry where the country has a clear-cut comparative DISadvantage in producing those goods or services. All you do in such cases is shift money/wealth into different sectors of the economy in an inefficient manner.

The beleifs that artificial economic intervention actually works, outside the boundries of when market failures have occured, are formed merely on oldskool social/political beliefs that have NO basis in todays modern economy. Such views are based on short-term evaluations of the situation and blatantly ignore the fact that we are holding or OWN futures back in the long-run. Lets not make the same mistakes that our predecessors made when it came to economic reform and leave our future generations with the exact same problems that we face today.

Economics science is exactly that.. It's a science. One of logic and mathematical precision... Have faith in it.

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Originally posted by wolverine16 outside competition at the bottom end sets an unrealistic wage for unskilled workers, who have the only alternatives of being unemployed or gaining skills to compete for higher level positions. The latter essentially drives down the wages offered for more skilled positions, as more people compete over the same jobs.

I'm not sure if you wanted it to come across like this, but you're making it sound like attaining an education is a bad thing, because it drives the competitive wage down. If anything we should be pushing for more people to get an education.

I'll give you a link to read up on the macroeconomic theory of economic growth (developed my Nobel Prize winner Robert Solow) on the impacts of education (Solow, and follow up researchers like Romer, models will treat 'education' as 'human capital') on the economy. Solow actually won the Nobel prize for this work, and it has been the cornerstone for economic growth research ever since (I quoted much of his work when writing my Thesis)

This link is a simple introduction to the model (just to get you started) without incorporating education into it:

The Solow model

adding the effects of education/human capital into the model we get:

Romers Endogenous Growth Model (an extension of Solow)

These links dont include any mathematics (for the sake of simplicity) and are simple as I could find. Most of this stuff is fairly advanced economics and is seen in 2-3rd year university.

Essentially, what I'm trying to say is that education is the ONLY way forward.

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