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All minimum wage increases are regressive against the poor. Let's say minimum wage is $1 and the family saved up $100 in a bank account. They have 100 units of

All minimum wage increases are regressive against the poor. Let's say minimum wage is $1 and the family saved up $100 in a bank account. They have 100 units of labor saved up, which is a lot of purchasing power. Now some brilliant economists move minimum wage to $100/hr. The family's saved labor is wiped; as the bank didn't automatically increase their savings to $100,000.

deleted 5y ago
[deleted]
ceeplusplus 5y ago
Not only that, high minimum wage doesn't actually make a minimum wage job any more livable than low minimum wage. Bay Area low skill wages are over $20-25/h already, but rent prices have risen to match (or in the case of rent control, the quality of housing declined exponentially to 1930s unmaintained shitboxes). Same goes for NYC, Seattle, LA, etc. No reason to expect rent to not increase accordingly if minimum wage goes up to $25/h.
- dredmorbius 5y ago
  A land-value tax, or an equivalent which captures surplus rent values and returns them to the general common weal would also be required. The law of rent and iron law of wages are two ends of the lever. Both must be addressed.
- kitkat_new 5y ago
  > Not only that, high minimum wage doesn't actually make a minimum wage job any more livable than low minimum wage. This is wrong, because not all costs will rise proportionally to the minimum wage in general There is more to the costs of living than a rent
TomGullen 5y ago
Increase in minimum wage should improve the quality of life for those on minimum wage - I wouldn't expect many minimum wage earning families to have substantial savings but it's irrelevant, we shouldn't let the imperfect be the enemy of the good
- exabrial 5y ago
  There is no scenario where increasing minimum wage improves anyone's quality of life, except if you're a Politician needing to buy votes.
  - TomGullen 5y ago
    This is absolute nonsense
    - Alupis 5y ago
      How can you be so sure? Minimum wage was introduced in 1938 at $0.25 per hour[1], which would be about $5.06 per hour when adjusted for inflation[2]. Today, federal minimum wage is $7.25[3] and majority states have minimum wages far higher than this. Adjusted for inflation, today's federal minimum wage is about 43% higher than it was in 1938. According to Wikipedia, 29 states and 40+ cities have minimum wages exceeding federal levels, which results in almost 90% of all minimum wage workers earning more than federal minimums with an average of $11.80[1]. This is a 133% increase in minimum wage since 1938 on the average - and cost of living is certainly not even remotely similar across the country. Originally, minimum wage was intended for low-skill/no-skill jobs, and expected folks would progress upward into skilled labor. It's a problem that folks no longer are doing this... there should not be 58 year old's manning the cash register at the local gas station. They've had 58 years to develop some sort of marketable skill, yet they haven't? All they can do is scan barcodes and hand out receipts? That's a problem... Fund community colleges, free 2 years or associate degrees, free 2 years of vocational/technical school... those are solutions, not temporary fixes like raising minimum wage every few years. Without a doubt, if we raised minimum wage to $25 today, we would be discussing $30 or more in a few years. We have the past 84 years of these exact debates to tell us that much at least. Just giving folks more money absolutely increases cost of living. We're literally seeing it right now in real time. We handed out thousands of dollars to nearly everyone and we're now seeing inflation at levels not seen since the 80's. This is economics 101 type stuff. Inflation and raising cost of living squeezes the very folks we're trying to help the most. High earners can afford to tighten their belt and eat out less often... but minimum wage earners living paycheck to paycheck can't cope with this sort of economy, and raising minimum wage just dooms them to experience it over and over and over again. Less band-aids, and more cures are required here... [1] https://en.wikipedia.org/wiki/Minimum_wage#United_States https://en.wikipedia.org/wiki/Minimum_wage#United_States [2] https://www.bls.gov/data/inflation_calculator.htm https://www.bls.gov/data/inflation_calculator.htm [3] https://www.dol.gov/agencies/whd/minimum-wage https://www.dol.gov/agencies/whd/minimum-wage
rdtwo 5y ago
Minimum wage causes inflation… no money printing causes inflation
- hayd 5y ago
  Why not both?
geofft 5y ago
There's two reasons this argument doesn't work. One - some 15-20% of Americans have a zero or negative net worth, which straightforwardly inverts the argument. Let's say minimum wage is $1 and the family owes $100 in credit card debt that they are not paying off. They must perform 100 hours of labor beyond their current production to pay off their debts. Now some brilliant economists move minimum wage to $100/hr. Their debts are wiped, as the banks didn't automatically increase their balance to $10,000. Two - it's not regressive. It's a tax on everyone, proportional to how little labor you do. A defining characteristic of the poor, compared to the rich, is that the poor make their money from their labor and the rich make their money from their existing money ("savings" / "passive income" / "investment" / "401(k)" / etc.). Suppose, in your example, your brilliant economists move minimum wage to $100/hr. Immediately, one hour later, their bank account has twice as much money! Sure, they have suffered a temporary loss of purchasing power, but after 100 more hours of labor they've regained it. Meanwhile, some other family in the same economy has saved $1,000,000 in a bank account, representing some five hundred person-years of full-time work at $1/hr, perhaps inherited over the centuries, perhaps gained from business. Their savings are also rather wiped, leaving them with roughly 1% of what they previously had - but regaining it will take them another five hundred person-years of full-time work. So it is certainly a tax, but it is very progressive. Really these are the same mathematical effect. The more money you have, the more it affects you; the less money you have, the less it affects you; and if you have negative money it even affects you positively.
remram 5y ago
> The family's saved labor is wiped Not in any way that matters. Your contrived definition doesn't erase the fact that money is for buying things, not showing off how much labor you performed. Increasing minimum wage doesn't trigger an automatic equivalent inflation.
deadbolt 5y ago
> All minimum wage increases are regressive against the poor. Boring econ100 opinion. This is the "imagine a sphere in a perfect vacuum" for econ.

deleted 5y ago

[deleted]

ceeplusplus 5y ago

Not only that, high minimum wage doesn't actually make a minimum wage job any more livable than low minimum wage. Bay Area low skill wages are over $20-25/h already, but rent prices have risen to match (or in the case of rent control, the quality of housing declined exponentially to 1930s unmaintained shitboxes). Same goes for NYC, Seattle, LA, etc. No reason to expect rent to not increase accordingly if minimum wage goes up to $25/h.

dredmorbius 5y ago
A land-value tax, or an equivalent which captures surplus rent values and returns them to the general common weal would also be required. The law of rent and iron law of wages are two ends of the lever. Both must be addressed.
kitkat_new 5y ago
> Not only that, high minimum wage doesn't actually make a minimum wage job any more livable than low minimum wage. This is wrong, because not all costs will rise proportionally to the minimum wage in general There is more to the costs of living than a rent

TomGullen 5y ago

Increase in minimum wage should improve the quality of life for those on minimum wage - I wouldn't expect many minimum wage earning families to have substantial savings but it's irrelevant, we shouldn't let the imperfect be the enemy of the good

exabrial 5y ago
There is no scenario where increasing minimum wage improves anyone's quality of life, except if you're a Politician needing to buy votes.
- TomGullen 5y ago
  This is absolute nonsense
  - Alupis 5y ago
    How can you be so sure? Minimum wage was introduced in 1938 at $0.25 per hour[1], which would be about $5.06 per hour when adjusted for inflation[2]. Today, federal minimum wage is $7.25[3] and majority states have minimum wages far higher than this. Adjusted for inflation, today's federal minimum wage is about 43% higher than it was in 1938. According to Wikipedia, 29 states and 40+ cities have minimum wages exceeding federal levels, which results in almost 90% of all minimum wage workers earning more than federal minimums with an average of $11.80[1]. This is a 133% increase in minimum wage since 1938 on the average - and cost of living is certainly not even remotely similar across the country. Originally, minimum wage was intended for low-skill/no-skill jobs, and expected folks would progress upward into skilled labor. It's a problem that folks no longer are doing this... there should not be 58 year old's manning the cash register at the local gas station. They've had 58 years to develop some sort of marketable skill, yet they haven't? All they can do is scan barcodes and hand out receipts? That's a problem... Fund community colleges, free 2 years or associate degrees, free 2 years of vocational/technical school... those are solutions, not temporary fixes like raising minimum wage every few years. Without a doubt, if we raised minimum wage to $25 today, we would be discussing $30 or more in a few years. We have the past 84 years of these exact debates to tell us that much at least. Just giving folks more money absolutely increases cost of living. We're literally seeing it right now in real time. We handed out thousands of dollars to nearly everyone and we're now seeing inflation at levels not seen since the 80's. This is economics 101 type stuff. Inflation and raising cost of living squeezes the very folks we're trying to help the most. High earners can afford to tighten their belt and eat out less often... but minimum wage earners living paycheck to paycheck can't cope with this sort of economy, and raising minimum wage just dooms them to experience it over and over and over again. Less band-aids, and more cures are required here... [1] https://en.wikipedia.org/wiki/Minimum_wage#United_States https://en.wikipedia.org/wiki/Minimum_wage#United_States [2] https://www.bls.gov/data/inflation_calculator.htm https://www.bls.gov/data/inflation_calculator.htm [3] https://www.dol.gov/agencies/whd/minimum-wage https://www.dol.gov/agencies/whd/minimum-wage

rdtwo 5y ago

Minimum wage causes inflation… no money printing causes inflation

hayd 5y ago
Why not both?

geofft 5y ago

There's two reasons this argument doesn't work. One - some 15-20% of Americans have a zero or negative net worth, which straightforwardly inverts the argument. Let's say minimum wage is $1 and the family owes $100 in credit card debt that they are not paying off. They must perform 100 hours of labor beyond their current production to pay off their debts. Now some brilliant economists move minimum wage to $100/hr. Their debts are wiped, as the banks didn't automatically increase their balance to $10,000. Two - it's not regressive. It's a tax on everyone, proportional to how little labor you do. A defining characteristic of the poor, compared to the rich, is that the poor make their money from their labor and the rich make their money from their existing money ("savings" / "passive income" / "investment" / "401(k)" / etc.). Suppose, in your example, your brilliant economists move minimum wage to $100/hr. Immediately, one hour later, their bank account has twice as much money! Sure, they have suffered a temporary loss of purchasing power, but after 100 more hours of labor they've regained it. Meanwhile, some other family in the same economy has saved $1,000,000 in a bank account, representing some five hundred person-years of full-time work at $1/hr, perhaps inherited over the centuries, perhaps gained from business. Their savings are also rather wiped, leaving them with roughly 1% of what they previously had - but regaining it will take them another five hundred person-years of full-time work. So it is certainly a tax, but it is very progressive. Really these are the same mathematical effect. The more money you have, the more it affects you; the less money you have, the less it affects you; and if you have negative money it even affects you positively.

remram 5y ago

> The family's saved labor is wiped Not in any way that matters. Your contrived definition doesn't erase the fact that money is for buying things, not showing off how much labor you performed. Increasing minimum wage doesn't trigger an automatic equivalent inflation.

deadbolt 5y ago

> All minimum wage increases are regressive against the poor. Boring econ100 opinion. This is the "imagine a sphere in a perfect vacuum" for econ.