7 ms·

One thing Congress could do immediately is cut the minimum wage. It is now at $7.25 per hour. This is a price control on labor. You can't make a worker's $5.

by drewr 17y ago

One thing Congress could do immediately is cut the minimum wage. It is now at $7.25 per hour. This is a price control on labor. You can't make a worker's $5.00/hour skills magically worth $7.25. They could also make it cheaper for small businesses to hire people. That $7.25/hour labor really costs $14.50.

jswinghammer 17y ago
Unions like minimum wage too much for that to happen. They've historically used minimum wages to try to drive up wage rates for their members.
- daniel-cussen 17y ago
  This is sad and true. The only way out for governments historically has been to inflate the currency to cut labor costs. It's like people need a government for them to have someone to lie to them.
flatline 17y ago
Nobody's labor is worth as little as $5/hour. That's not a living wage anywhere in the US, and as a result it borders on slave labor to hire people for that little. The high price for small businesses is, however, a more realistic problem.
- ewanmcteagle 17y ago
  By what process do you come to the conclusion that no labor is worth as little as $5/hour?
  - flatline 17y ago
    By virtue of the fact that it's not possible to make enough to provide food and shelter on that amount (an untested hypothesis on my own part, admittedly). If someone is not trying to make a living then there well may be labor that is worth that little, but I'm not sure how you would make a meaningful distinction to avoid exploitation without a ton of other, more onerous regulations.
    - fnid2 17y ago
      sure you can, here's how $5/day on food $10/day rent $5/day utilities + entertainment $2.50/day transportation $22.50/day or $8,218.13 per year in expenses. At $5/hr, you are making $10k a year for a full time job w/ 2 weeks vacation.
      - psranga 17y ago
        $300/mo for rent and $2.50/day for transportation? Sign me up. FYI a single ride on the bus/light rail in the Bay Area (VTA) costs $3.75.
        tomjen2 17y ago
        There are houses in small towns that have been abandonded, I am sure you can rent a room (or even the house) for $300/mo. You can properly pay some dude $2.50 in gas money to drive you.
        fnid2 17y ago
        That's your issue. You want to live in the bay area. Many cities have monthly passes for under $60.
        ismarc 17y ago
        Austin bus system is $2 for a day pass (unlimited riding for 24 hours), $8 for a for a 7 day pass and $28 for a 31 day pass. $300/month is a bit low for rent, but for $500 you can have a nice 1 bedroom, $350-$400 you can get a reasonable studio in a decent part of town.
    - kaens 17y ago
      Oh, it's possible to provide food and shelter on that amount (depending on what area you're living in, and dependent on you only needing to support yourself), but it's very hard to do so in such a way that one moves themselves forward in life, and it's practically impossible to do so in a way that isn't ridiculously depressing. Sources: I lived on < $10,000/yr for quite a while. It should be noted that I am not advocating reducing (or increasing) minimum wage. I think that the issue that people try to address via minimum wage is a clusterfuck of an issue that won't really be solved without a pretty large paradigm shift in how people acquire, or are provided with, their food and shelter.
  - ubernostrum 17y ago
    By what process do you come to the conclusion that not everyone deserves a chance at food and shelter?
    - dschobel 17y ago
      Actually, you're both wrong. According to new numbers from the Labor Department, in 2008 only 1.1% of Americans who work 40 hours a week or more even earned the minimum wage. In other words, 98.9% of 40-hour-a-week workers earn more than the minimum. The data also show that teenagers are five times more likely to earn the minimum wage than adults. http://online.wsj.com/article/SB10001424052970203440104574402820278669840.html http://online.wsj.com/article/SB1000142405297020344010457440... So the people who are most affected by changes to the minimum wage are teenagers who aren't paying for food and shelter, but looking for disposable income. Ergo, cutting the minimum wage won't be a boon for new jobs nor will it be cutting anyone's standard of living.
      - anamax 17y ago
        > So the people who are most affected by changes to the minimum wage are teenagers who aren't paying for food and shelter, but looking for disposable income. > Ergo, cutting the minimum wage won't be a boon for new jobs nor will it be cutting anyone's standard of living. Not so fast. Many of those teenagers are learning to work, which makes their future labor more valuable. If they don't get such skills, they'll never be worth employing. Also, some of those teens are contributing to their household's income.
- ja30278 17y ago
  Do you think that cost of labor has any connection to prices, which , in aggregate, creates the cost of living in any particular place? In other words: higher minimum wage = higher prices = higher 'cost of living' As a thought experiment, would you support making the minimum wage $1000/hr. If not, why not? Honestly, the concept of a 'minimum wage' is one of the stupidest things I can imagine.
  - ippisl 17y ago
    It all depends on the job and how labor intensive it is. For many jobs that are not labor intensive , reducing wages below won't make a huge difference , but for those who wok for this jobs , it will make a huge difference.
- fnid2 17y ago
  your mistake is in believing that all work is worth enough to live on -- but it isn't. There is a lot of trivial work to be done that isn't worth rent+food+utilities+... There are things I'd pay someone $5/hr to do but not 50% more than that. It's a huge gap. At one point in history, Luxembourg had the highest unemployment, largely due to the $10/hr minimum wage, which was the highest in the world at that time.
  - crux_ 17y ago
    > your mistake is in believing that all work is worth enough to live on -- but it isn't. I think it's more a moral belief that anyone who works ought to be able to support themselves by doing so.
- ams6110 17y ago
  Nobody is forced to work for any wage, thus the "slave" analogy doesn't apply. If not enough people are willing to do a job for $5/hr, then the employer will have to either pay a higher wage or reassess whether he needs the work done at all.
- ShabbyDoo 17y ago
  Your definition of "worth" must be more like my definition of "deserves".
- drewr 17y ago
  My first job paid me $4 per hour, plus tips. That was 16 years ago and I was overpaid. However, that's what my labor was worth to my superiors, and they knew their business better than did the USG. You make two assumptions with your comment. One is that everybody making minimum wage is supporting a family of four. I have sympathy for those people. Pricing them out of a job, however, is simply cruel. They need to increase the value of their skill with experience or education. And what better way to do that than to make less than they want for a period of time so that they can build up one or both of those. Which brings me to your other assumption -- people who make a low wage will always make a low wage. I now make many times over that $4 per hour. That job enabled me to get another job which enabled me to get another job, etc. I wasn't doing what I do now, but every job had in common the attribute that I had to make myself worth what I was being paid, whether that's $4 per hour or $100. Every day I use experience gained at each of those jobs, even the most miserable ones. There was a story on HN a while ago about a guy with an MBA who now works at Publix. He had been laid off and claimed that he wanted to teach his sons that work was dignified no matter the job. I believe he was being paid $8/hour or so. Publix has no choice but to pay him $8/hour because he likely can't do a much better job at bagging groceries than the 16 year-old next to him whose labor has been assigned that value by politicians who have never run a grocery store. If Publix wasn't forced to pay the teenager a higher wage than he's likely worth, Publix could either hire more teenagers and reduce everyone's workload and provide the customer a better experience, or they could pay the teen $4/hr and the father $12/hr. That may enable the father to work there a little longer only to discover he is next in line for management because of his experience. His wife is thrilled that he's not traveling the world anymore eating out. And who better to run the store than someone who has been at the lowest level? Is the teen a slave at $4/hr? No, because he can walk next door to Kroger and see what they pay. Maybe it's $4.10. He decides to stay at Publix because he's already decorated his locker and made friends with the older guy who has great stories about traveling the world. Businesses will determine quite well what their labor is worth and doesn't need USG to do it. Workers will determine quite well what corners they are willing to cut when times get hard. The latter may find that getting out of bed for a crappy, low-paying job enabled them to find a better opportunity.
daniel-cussen 17y ago
There are a lot of states without minimum wages. They are cheaper to live in and, believe it or not, workers make more than pennies per hour. The second point you bring up is worth discussing too. Between payroll taxes, health insurance, and social security hiring people is ather expensive.
- angelbob 17y ago
  Isn't there a Federal minimum wage? Don't the states have to respect it? California's is higher, but I thought everybody had to respect Federal minimum wage, at least in the US.
  - tomjen2 17y ago
    I don't think he other countries, not in the us.
  - daniel-cussen 17y ago
    Weirdly enough, the Federal minimum wage applies to states that track the Federal minimum. Some states have no minimum wage and some have minimum wages different from the Federal minimum. I think it's a strange system, but there you go. http://en.wikipedia.org/wiki/Minimum_wage_in_the_United_States#Jobs_affected_by_the_Minimum_Wage http://en.wikipedia.org/wiki/Minimum_wage_in_the_United_Stat...
- jws 17y ago
  And all of those states are in the the bottom half (I'd say third, but south carolina is a bit above that for standard of living) of states ranked by standard of living, education, and infant mortality. In fact, for infant mortality these 5 states hold the top 4 spots.
jbrun 17y ago
Minimum wage is there for a reason - to protect workers from exploitation. We will always have people who lack education and work ethic, then you have immigrants who are not necessarily familiar with a language - all these people are relatively easy to exploit, and they are still human and deserve access to certain basic things (food, shelter, transportation, heat, etc.). While the educated and ambitious are not worried about the minimum wage, it helps a great many people survive. Furthermore, very cheap labour (as well as subsidized labour) reduces the incentive to innovate and automate, which I am sure this forum is keen on.
- huangm 17y ago
  It would be great if all minimum wage did was 'prevent exploitation.' But the simple fact is: minimum wage cuts jobs.
  - mos1 17y ago
    That's not a "simple fact." Minimum wage also transfers money to low-wage workers, who tend to spend every cent they're given, which acts as an economic boost for the area, and creates job. All the research I've seen shows that there are two conflicting effects, and even well-educated experts, who have spent long periods of time studying it, have a very hard time determining if the effect is net positive, negative, or neutral.
    - yummyfajitas 17y ago
      It only transfers money to low wage workers if they still have a job. Fortunately, minimum wage cuts very few jobs; market rate is usually significantly higher than $7.25 an hour. However, when you pass a minimum wage higher than market rate, you do have significant effects. Take American Samoa, for example, which recently lost several thousand tuna canning jobs to the recent minimum wage hike: http://www.washingtonexaminer.com/opinion/columns/Ask-American-Samoa-how-minimum-wage-killed-jobs-82117032.html http://www.washingtonexaminer.com/opinion/columns/Ask-Americ...
      - 17y ago
rms 17y ago
I would be strongly in favor of eliminating the minimum wage, if we had an appropriately socialized system of food, water, clothing, and job training distribution. But that's never going to happen. I have a nearly unlimited amount of viewpoints on political matters, but more and more I think it's almost irrelevant. Politics seems like this kind of fun thing where we can have infinitely many new and continuing arguments, but this arguing is never going to accomplish anything. I'm not a senator, and even senators quickly become jaded and cynical at how little actual power their high status provides.

by drewr 17y ago

jswinghammer 17y ago

Unions like minimum wage too much for that to happen. They've historically used minimum wages to try to drive up wage rates for their members.

daniel-cussen 17y ago
This is sad and true. The only way out for governments historically has been to inflate the currency to cut labor costs. It's like people need a government for them to have someone to lie to them.

flatline 17y ago

Nobody's labor is worth as little as $5/hour. That's not a living wage anywhere in the US, and as a result it borders on slave labor to hire people for that little. The high price for small businesses is, however, a more realistic problem.

ewanmcteagle 17y ago
By what process do you come to the conclusion that no labor is worth as little as $5/hour?
- flatline 17y ago
  By virtue of the fact that it's not possible to make enough to provide food and shelter on that amount (an untested hypothesis on my own part, admittedly). If someone is not trying to make a living then there well may be labor that is worth that little, but I'm not sure how you would make a meaningful distinction to avoid exploitation without a ton of other, more onerous regulations.
  - fnid2 17y ago
    sure you can, here's how $5/day on food $10/day rent $5/day utilities + entertainment $2.50/day transportation $22.50/day or $8,218.13 per year in expenses. At $5/hr, you are making $10k a year for a full time job w/ 2 weeks vacation.
    - psranga 17y ago
      $300/mo for rent and $2.50/day for transportation? Sign me up. FYI a single ride on the bus/light rail in the Bay Area (VTA) costs $3.75.
      - tomjen2 17y ago
        There are houses in small towns that have been abandonded, I am sure you can rent a room (or even the house) for $300/mo. You can properly pay some dude $2.50 in gas money to drive you.
      - fnid2 17y ago
        That's your issue. You want to live in the bay area. Many cities have monthly passes for under $60.
      - ismarc 17y ago
        Austin bus system is $2 for a day pass (unlimited riding for 24 hours), $8 for a for a 7 day pass and $28 for a 31 day pass. $300/month is a bit low for rent, but for $500 you can have a nice 1 bedroom, $350-$400 you can get a reasonable studio in a decent part of town.
  - kaens 17y ago
    Oh, it's possible to provide food and shelter on that amount (depending on what area you're living in, and dependent on you only needing to support yourself), but it's very hard to do so in such a way that one moves themselves forward in life, and it's practically impossible to do so in a way that isn't ridiculously depressing. Sources: I lived on < $10,000/yr for quite a while. It should be noted that I am not advocating reducing (or increasing) minimum wage. I think that the issue that people try to address via minimum wage is a clusterfuck of an issue that won't really be solved without a pretty large paradigm shift in how people acquire, or are provided with, their food and shelter.
- ubernostrum 17y ago
  By what process do you come to the conclusion that not everyone deserves a chance at food and shelter?
  - dschobel 17y ago
    Actually, you're both wrong. According to new numbers from the Labor Department, in 2008 only 1.1% of Americans who work 40 hours a week or more even earned the minimum wage. In other words, 98.9% of 40-hour-a-week workers earn more than the minimum. The data also show that teenagers are five times more likely to earn the minimum wage than adults. http://online.wsj.com/article/SB10001424052970203440104574402820278669840.html http://online.wsj.com/article/SB1000142405297020344010457440... So the people who are most affected by changes to the minimum wage are teenagers who aren't paying for food and shelter, but looking for disposable income. Ergo, cutting the minimum wage won't be a boon for new jobs nor will it be cutting anyone's standard of living.
    - anamax 17y ago
      > So the people who are most affected by changes to the minimum wage are teenagers who aren't paying for food and shelter, but looking for disposable income. > Ergo, cutting the minimum wage won't be a boon for new jobs nor will it be cutting anyone's standard of living. Not so fast. Many of those teenagers are learning to work, which makes their future labor more valuable. If they don't get such skills, they'll never be worth employing. Also, some of those teens are contributing to their household's income.
ja30278 17y ago
Do you think that cost of labor has any connection to prices, which , in aggregate, creates the cost of living in any particular place? In other words: higher minimum wage = higher prices = higher 'cost of living' As a thought experiment, would you support making the minimum wage $1000/hr. If not, why not? Honestly, the concept of a 'minimum wage' is one of the stupidest things I can imagine.
- ippisl 17y ago
  It all depends on the job and how labor intensive it is. For many jobs that are not labor intensive , reducing wages below won't make a huge difference , but for those who wok for this jobs , it will make a huge difference.
fnid2 17y ago
your mistake is in believing that all work is worth enough to live on -- but it isn't. There is a lot of trivial work to be done that isn't worth rent+food+utilities+... There are things I'd pay someone $5/hr to do but not 50% more than that. It's a huge gap. At one point in history, Luxembourg had the highest unemployment, largely due to the $10/hr minimum wage, which was the highest in the world at that time.
- crux_ 17y ago
  > your mistake is in believing that all work is worth enough to live on -- but it isn't. I think it's more a moral belief that anyone who works ought to be able to support themselves by doing so.
ams6110 17y ago
Nobody is forced to work for any wage, thus the "slave" analogy doesn't apply. If not enough people are willing to do a job for $5/hr, then the employer will have to either pay a higher wage or reassess whether he needs the work done at all.
ShabbyDoo 17y ago
Your definition of "worth" must be more like my definition of "deserves".
drewr 17y ago
My first job paid me $4 per hour, plus tips. That was 16 years ago and I was overpaid. However, that's what my labor was worth to my superiors, and they knew their business better than did the USG. You make two assumptions with your comment. One is that everybody making minimum wage is supporting a family of four. I have sympathy for those people. Pricing them out of a job, however, is simply cruel. They need to increase the value of their skill with experience or education. And what better way to do that than to make less than they want for a period of time so that they can build up one or both of those. Which brings me to your other assumption -- people who make a low wage will always make a low wage. I now make many times over that $4 per hour. That job enabled me to get another job which enabled me to get another job, etc. I wasn't doing what I do now, but every job had in common the attribute that I had to make myself worth what I was being paid, whether that's $4 per hour or $100. Every day I use experience gained at each of those jobs, even the most miserable ones. There was a story on HN a while ago about a guy with an MBA who now works at Publix. He had been laid off and claimed that he wanted to teach his sons that work was dignified no matter the job. I believe he was being paid $8/hour or so. Publix has no choice but to pay him $8/hour because he likely can't do a much better job at bagging groceries than the 16 year-old next to him whose labor has been assigned that value by politicians who have never run a grocery store. If Publix wasn't forced to pay the teenager a higher wage than he's likely worth, Publix could either hire more teenagers and reduce everyone's workload and provide the customer a better experience, or they could pay the teen $4/hr and the father $12/hr. That may enable the father to work there a little longer only to discover he is next in line for management because of his experience. His wife is thrilled that he's not traveling the world anymore eating out. And who better to run the store than someone who has been at the lowest level? Is the teen a slave at $4/hr? No, because he can walk next door to Kroger and see what they pay. Maybe it's $4.10. He decides to stay at Publix because he's already decorated his locker and made friends with the older guy who has great stories about traveling the world. Businesses will determine quite well what their labor is worth and doesn't need USG to do it. Workers will determine quite well what corners they are willing to cut when times get hard. The latter may find that getting out of bed for a crappy, low-paying job enabled them to find a better opportunity.

daniel-cussen 17y ago

There are a lot of states without minimum wages. They are cheaper to live in and, believe it or not, workers make more than pennies per hour. The second point you bring up is worth discussing too. Between payroll taxes, health insurance, and social security hiring people is ather expensive.

angelbob 17y ago
Isn't there a Federal minimum wage? Don't the states have to respect it? California's is higher, but I thought everybody had to respect Federal minimum wage, at least in the US.
- tomjen2 17y ago
  I don't think he other countries, not in the us.
- daniel-cussen 17y ago
  Weirdly enough, the Federal minimum wage applies to states that track the Federal minimum. Some states have no minimum wage and some have minimum wages different from the Federal minimum. I think it's a strange system, but there you go. http://en.wikipedia.org/wiki/Minimum_wage_in_the_United_States#Jobs_affected_by_the_Minimum_Wage http://en.wikipedia.org/wiki/Minimum_wage_in_the_United_Stat...
jws 17y ago
And all of those states are in the the bottom half (I'd say third, but south carolina is a bit above that for standard of living) of states ranked by standard of living, education, and infant mortality. In fact, for infant mortality these 5 states hold the top 4 spots.

jbrun 17y ago

Minimum wage is there for a reason - to protect workers from exploitation. We will always have people who lack education and work ethic, then you have immigrants who are not necessarily familiar with a language - all these people are relatively easy to exploit, and they are still human and deserve access to certain basic things (food, shelter, transportation, heat, etc.). While the educated and ambitious are not worried about the minimum wage, it helps a great many people survive. Furthermore, very cheap labour (as well as subsidized labour) reduces the incentive to innovate and automate, which I am sure this forum is keen on.

huangm 17y ago
It would be great if all minimum wage did was 'prevent exploitation.' But the simple fact is: minimum wage cuts jobs.
- mos1 17y ago
  That's not a "simple fact." Minimum wage also transfers money to low-wage workers, who tend to spend every cent they're given, which acts as an economic boost for the area, and creates job. All the research I've seen shows that there are two conflicting effects, and even well-educated experts, who have spent long periods of time studying it, have a very hard time determining if the effect is net positive, negative, or neutral.
  - yummyfajitas 17y ago
    It only transfers money to low wage workers if they still have a job. Fortunately, minimum wage cuts very few jobs; market rate is usually significantly higher than $7.25 an hour. However, when you pass a minimum wage higher than market rate, you do have significant effects. Take American Samoa, for example, which recently lost several thousand tuna canning jobs to the recent minimum wage hike: http://www.washingtonexaminer.com/opinion/columns/Ask-American-Samoa-how-minimum-wage-killed-jobs-82117032.html http://www.washingtonexaminer.com/opinion/columns/Ask-Americ...
    - 17y ago

rms 17y ago

I would be strongly in favor of eliminating the minimum wage, if we had an appropriately socialized system of food, water, clothing, and job training distribution. But that's never going to happen. I have a nearly unlimited amount of viewpoints on political matters, but more and more I think it's almost irrelevant. Politics seems like this kind of fun thing where we can have infinitely many new and continuing arguments, but this arguing is never going to accomplish anything. I'm not a senator, and even senators quickly become jaded and cynical at how little actual power their high status provides.