Anyone not worth more than minimum wage is probably not worth minimum wage.
Minimum wage is zero. If there are no jobs at less than minimum wage how do they get the experience to make themselves worth the minimum.
Even slaves had to be fed and housed and bought. The possibility of zero wages today is only for those people who already have some other way of getting their basic necessities. I think the Nazis tried the real zero wage policy and the end result was a lot of dead people who couldn’t work anymore. Which takes me to another point: “there are such better tools to help the working poor than the minimum wage (such as the Earned Income Tax Credit or other wage subisdy)” [sic]
In other words it is much better that the STATE pays poor people to get out of poverty rather than getting adequately paid by their employers. Very free market indeed. Riders of the purple wage to the rescue.
Godzilla says, (of EITC): “In other words it is much better that the STATE pays poor people to get out of poverty rather than getting adequately paid by their employers. Very free market indeed.”
Well, yes. You write that in a dismissive tone. But you are correct. It is better, in a democracy, that all voters and taxpayers who emotionally support impoverished workers chip in to provide a basic level of financial subsistence, than voting for someone else (employers) to be compelled to do so.
Consider an imaginary model small town. In general all businesses are sole proprietors. Kate, all by herself, runs a little hotel. Sam runs a general store. Gomer runs the garage. Floyd runs the barber shop and Emmett runs the “fixit” shop. Fred Ziffle runs a small pig farm. The only exceptions to the general rule are that Charley, owner and engineer on “The Cannonball”, pays Fred to be the conductor; and Oliver-Wendell pays Eb $9/ hr to be a general farm hand. Now supposing Eb starts dating and making noises about getting a raise, so that he can afford to start a family. And so the town holds a vote — in which (low voter turn-out, as usual these degraded days) only the individuals named above actually bother to vote. So, six to four, the voters agree: Oliver should give Eb a raise — to $15 dollars an hour. ALL of Eb’s raise comes out of Oliver’s farm profits — or savings, given that Oliver is a terrible and unprofitable farmer. Voting for Eb (and his hypothetical, future, family) cost Sam, Kate, etc nothing at all. But the felt so GOOD about it..
Imagine, instead, if all the proprietors in TV-land passed the hat and guarenteed Eb that, so long as he continued to work, he’d be supported at some level sufficient to raise a family. Oliver dips into savings, again, sure. But Sam and Kate and Floyd and Emmett and everybody is sharing the load.
So, yes, Mr Godzilla. An EITC style plan is better, presuming the voters do want to do good by the impoverished.
Of course, that may prove to be an invalid presumption. Perhaps, after a few years, they’d prefer NOT to keep chipping in on somebody else’s family. It happens.
Today I learned California already has a state EITC, which could have been raised, neatly avoiding the probable disemployment effect of a higher minimum wage. As Dickens might have said: It was the best of states, it will be the worst of states.
The possibility of zero wages today is only for those people who already have some other way of getting their basic necessities.
When people say the real minimum wage is always zero, they mean people don’t have a job, not that they have a job that pays no wage.
Regulations, like a mandated wage, can cause business to close or to not hire as many people as they would otherwise. Anyone who doesn’t have a job, has a wage of zero.
On the EITC, Milton Friedman put it in the context of debating alternatives. A large part of society wants some form of welfare, so what is the best way to deliver it? Typical welfare schemes take money from the populace and then filter it through a number of government agencies, with each taking their cut. Why not put the money directly in the hands of the poor and skip the part about each agency taking a cut?
But a key part of this is that the EITC was to be the only form of welfare. People could spend their money on health insurance, rent, or booze as they saw fit. There will always be people who make bad choices and would choose booze over rent. Then charities would pursue the areas they thought needed assistance.
A much better technique to help the poor would be for the Feds to get out of the way so that more jobs are created.
There is a Laffer Curve effect for minimum wage. Some businesses can’t compete as minimum wage increases and some can but the higher it goes less and less are able to do so.
A good way to look at it is by totaling the costs per employee, have a range of staff numbers, add in overhead, add in a proxy for operations costs, and come up with the base revenue businesses would need just to break even. All businesses under that threshhold would cease to exist but more importantly, no business could be started that couldn’t hit those revenue numbers.
A while back I read something about breweries and how in order to be successful, they had to be able to hit a certain volume to generate enough revenue cover all of their costs and make a profit. This would dictate what their production facilities would look like, which would then change the equation about how much volume they needed to produce and how much they would spend on marketing. But the point is, from the get go, they had to have a large enough facility to hold the brewing equipment needed and have enough equipment to produce large quantities of beer. It isn’t something you can start off small. The minimum production needed was large and required a lot of investment to achieve.
The same applies for any business and doubling labor costs has a huge effect on what businesses can be started. It is really hard to study because we will never know how many businesses people couldn’t start. And you can’t say they are all crapy businesses ideas because businesses are just like people and need to grow before they can reach their full potential.
I think it makes perfect sense for administrators in Washington to determine the wage of a dishwasher in Tucson, Arizona and a waiter in Manhattan. The complexities of running a business and trying to stay afloat are minuscule to the amount of caring that can come from a government employee making nearly six figures a year.
The market for low-skilled and no-skilled labor follows the rules of supply and demand the same as just about everything else. If you make low/no skilled labor more expensive, employers will consume less of it. If you keep inflicting regulatory burdens on companies, they have less money available to expand their business or hire people who can actually make money as opposed to hiring employees to help you comply with the regulations.
Anyone not worth more than minimum wage is probably not worth minimum wage.
Minimum wage is zero. If there are no jobs at less than minimum wage how do they get the experience to make themselves worth the minimum.
Even slaves had to be fed and housed and bought. The possibility of zero wages today is only for those people who already have some other way of getting their basic necessities. I think the Nazis tried the real zero wage policy and the end result was a lot of dead people who couldn’t work anymore. Which takes me to another point:
“there are such better tools to help the working poor than the minimum wage (such as the Earned Income Tax Credit or other wage subisdy)” [sic]
In other words it is much better that the STATE pays poor people to get out of poverty rather than getting adequately paid by their employers. Very free market indeed. Riders of the purple wage to the rescue.
Godzilla says, (of EITC): “In other words it is much better that the STATE pays poor people to get out of poverty rather than getting adequately paid by their employers. Very free market indeed.”
Well, yes. You write that in a dismissive tone. But you are correct. It is better, in a democracy, that all voters and taxpayers who emotionally support impoverished workers chip in to provide a basic level of financial subsistence, than voting for someone else (employers) to be compelled to do so.
Consider an imaginary model small town. In general all businesses are sole proprietors. Kate, all by herself, runs a little hotel. Sam runs a general store. Gomer runs the garage. Floyd runs the barber shop and Emmett runs the “fixit” shop. Fred Ziffle runs a small pig farm. The only exceptions to the general rule are that Charley, owner and engineer on “The Cannonball”, pays Fred to be the conductor; and Oliver-Wendell pays Eb $9/ hr to be a general farm hand. Now supposing Eb starts dating and making noises about getting a raise, so that he can afford to start a family. And so the town holds a vote — in which (low voter turn-out, as usual these degraded days) only the individuals named above actually bother to vote. So, six to four, the voters agree: Oliver should give Eb a raise — to $15 dollars an hour. ALL of Eb’s raise comes out of Oliver’s farm profits — or savings, given that Oliver is a terrible and unprofitable farmer. Voting for Eb (and his hypothetical, future, family) cost Sam, Kate, etc nothing at all. But the felt so GOOD about it..
Imagine, instead, if all the proprietors in TV-land passed the hat and guarenteed Eb that, so long as he continued to work, he’d be supported at some level sufficient to raise a family. Oliver dips into savings, again, sure. But Sam and Kate and Floyd and Emmett and everybody is sharing the load.
So, yes, Mr Godzilla. An EITC style plan is better, presuming the voters do want to do good by the impoverished.
Of course, that may prove to be an invalid presumption. Perhaps, after a few years, they’d prefer NOT to keep chipping in on somebody else’s family. It happens.
Today I learned California already has a state EITC, which could have been raised, neatly avoiding the probable disemployment effect of a higher minimum wage. As Dickens might have said: It was the best of states, it will be the worst of states.
The possibility of zero wages today is only for those people who already have some other way of getting their basic necessities.
When people say the real minimum wage is always zero, they mean people don’t have a job, not that they have a job that pays no wage.
Regulations, like a mandated wage, can cause business to close or to not hire as many people as they would otherwise. Anyone who doesn’t have a job, has a wage of zero.
On the EITC, Milton Friedman put it in the context of debating alternatives. A large part of society wants some form of welfare, so what is the best way to deliver it? Typical welfare schemes take money from the populace and then filter it through a number of government agencies, with each taking their cut. Why not put the money directly in the hands of the poor and skip the part about each agency taking a cut?
But a key part of this is that the EITC was to be the only form of welfare. People could spend their money on health insurance, rent, or booze as they saw fit. There will always be people who make bad choices and would choose booze over rent. Then charities would pursue the areas they thought needed assistance.
https://www.youtube.com/watch?v=xtpgkX588nM
A much better technique to help the poor would be for the Feds to get out of the way so that more jobs are created.
There is a Laffer Curve effect for minimum wage. Some businesses can’t compete as minimum wage increases and some can but the higher it goes less and less are able to do so.
A good way to look at it is by totaling the costs per employee, have a range of staff numbers, add in overhead, add in a proxy for operations costs, and come up with the base revenue businesses would need just to break even. All businesses under that threshhold would cease to exist but more importantly, no business could be started that couldn’t hit those revenue numbers.
A while back I read something about breweries and how in order to be successful, they had to be able to hit a certain volume to generate enough revenue cover all of their costs and make a profit. This would dictate what their production facilities would look like, which would then change the equation about how much volume they needed to produce and how much they would spend on marketing. But the point is, from the get go, they had to have a large enough facility to hold the brewing equipment needed and have enough equipment to produce large quantities of beer. It isn’t something you can start off small. The minimum production needed was large and required a lot of investment to achieve.
The same applies for any business and doubling labor costs has a huge effect on what businesses can be started. It is really hard to study because we will never know how many businesses people couldn’t start. And you can’t say they are all crapy businesses ideas because businesses are just like people and need to grow before they can reach their full potential.
I think it makes perfect sense for administrators in Washington to determine the wage of a dishwasher in Tucson, Arizona and a waiter in Manhattan. The complexities of running a business and trying to stay afloat are minuscule to the amount of caring that can come from a government employee making nearly six figures a year.
The market for low-skilled and no-skilled labor follows the rules of supply and demand the same as just about everything else. If you make low/no skilled labor more expensive, employers will consume less of it. If you keep inflicting regulatory burdens on companies, they have less money available to expand their business or hire people who can actually make money as opposed to hiring employees to help you comply with the regulations.