economic boom=fail

[Adam D]

http://www.msnbc.msn.com/id/4178546/

[bfp]

[Companies add 112,000 new jobs; Rate falls to 5.6%]

[Ryan]

Yes, but at least 150,000 new jobs were expected. Jobs are simply not growing at an acceptable rate for most Americans. We are going through a sort of economic shift right now, as foreign wages rise and domestic wages fall in many sectors. This is all a natural part of adjustment in this economy, which is ever-increasingly dependent on the global market. Jobs flow out, foreign wages rise as demand for foreign work increases, and the supply of work at home decreases, thereby decreasing wages here. This is not Dubya's fault nor is there much he can do about it, but it will certainly play a big role in this election.

so - your thoughts on the impact an increase in the minimum wage will have on the domestic labor market?

[bfp]

Originally posted by xiannaix
so - your thoughts on the impact an increase in the minimum wage will have on the domestic labor market?

Higher unemployment rate.

[Ryan]

Originally posted by xiannaix
so - your thoughts on the impact an increase in the minimum wage will have on the domestic labor market?

It's hard to say. Generally speaking, minimum wage workers do not hold jobs that can be outsourced to other countries. Over here, even the most basic manufacturing jobs often involve unions, which pretty much raises the average wages across the boards. Menial labor positions that draw minimum wages are most commonly service-related jobs, and these cannot be sent overseas.

This argument of huge unemployment is brought up every time there is an increase in the minimum wage, yet it has never proven to be true. A few people will always lose their jobs, but many more will benefit from the higher wages. This pretty much holds true any time the government passes a new labor law, industries shift, or technologies become outdated. Just as millions of others have done, including myself, people can accept the change and adjust to it for sake of the greater good.

Originally posted by Ryan
It's hard to say. Generally speaking, minimum wage workers do not hold jobs that can be outsourced to other countries. Over here, even the most basic manufacturing jobs often involve unions, which pretty much raises the average wages across the boards. Menial labor positions that draw minimum wages are most commonly service-related jobs, and these cannot be sent overseas.

This argument of huge unemployment is brought up every time there is an increase in the minimum wage, yet it has never proven to be true. A few people will always lose their jobs, but many more will benefit from the higher wages. This pretty much holds true any time the government passes a new labor law, industries shift, or technologies become outdated. Just as millions of others have done, including myself, people can accept the change and adjust to it for sake of the greater good.

Artificially (through government action) meddling with one side of a contract will have negative effects. Increased wages for employees at the bottom will send a ripple upward. How to you justify giving a raise to the floor sweeper who now makes as much as a more skilled position?

[Ryan]

Originally posted by xiannaix
Artificially (through government action) meddling with one side of a contract will have negative effects. Increased wages for employees at the bottom will send a ripple upward. How to you justify giving a raise to the floor sweeper who now makes as much as a more skilled position?

Do you have any historical proof of this? We've had numerous increases in the minimum wage over the years, and floor sweepers still earn far less than skilled workers.

[bfp]

Originally posted by Ryan
It's hard to say. Generally speaking, minimum wage workers do not hold jobs that can be outsourced to other countries. Over here, even the most basic manufacturing jobs often involve unions, which pretty much raises the average wages across the boards. Menial labor positions that draw minimum wages are most commonly service-related jobs, and these cannot be sent overseas.

This argument of huge unemployment is brought up every time there is an increase in the minimum wage, yet it has never proven to be true. A few people will always lose their jobs, but many more will benefit from the higher wages. This pretty much holds true any time the government passes a new labor law, industries shift, or technologies become outdated. Just as millions of others have done, including myself, people can accept the change and adjust to it for sake of the greater good.

http://www.cato.org/pubs/regulation/reg18n1c.html


Minimum wage laws focus on wages, not employment; if someone is employed, then he will receive at least the guaranteed wage. The law sets the terms of whatever employment happens to occur. The reduction in employment that results from increases in the minimum wage, which is concentrated among those workers with the fewest skills, is the cruel "dark side" of such legislation.
To understand the perversity of such a law, explore the alternatives available to employee and employer when the minimum wage is increased. The employee’s only choice is to find a job that pays more or become a nonemployee. The employer and the consumer, who is the employer’s employer, have a broader range of options. The employer can replace low-wage workers with more-productive workers; after all, the vast majority of workers have wages that exceed even the most aggressive proposal for wage floors.

A second alternative is to outsource, to subcontract activities performed by low-wage employees by going abroad or to self-employed contractors, since the government has as yet been unable to devise a scheme for imposing minimum wages on the self-employed. A third alternative is to automate, to substitute machines that do not have legislated minimum prices. Finally, there is the alternative of just cutting back. If minimum wages accomplish anything, they increase the employer’s costs, causing the purchasers of his product or service to search for lower-priced alternatives. This may include choosing the same products from abroad or switching, in whole or in part, to different products.

Originally posted by Ryan
Do you have any historical proof of this? We've had numerous increases in the minimum wage over the years, and floor sweepers still earn far less than skilled workers.

Uh - I have worked in jobs that saw their pay scale adjusrted upward to reflect new mandated wage increases - so yes.

But, you make my point - floor sweepers will always earn less than the more skilled positions.

[Ryan]

Originally posted by bfp
http://www.cato.org/pubs/regulation/reg18n1c.html


Minimum wage laws focus on wages, not employment; if someone is employed, then he will receive at least the guaranteed wage. The law sets the terms of whatever employment happens to occur. The reduction in employment that results from increases in the minimum wage, which is concentrated among those workers with the fewest skills, is the cruel "dark side" of such legislation.
To understand the perversity of such a law, explore the alternatives available to employee and employer when the minimum wage is increased. The employee’s only choice is to find a job that pays more or become a nonemployee. The employer and the consumer, who is the employer’s employer, have a broader range of options. The employer can replace low-wage workers with more-productive workers; after all, the vast majority of workers have wages that exceed even the most aggressive proposal for wage floors.

A second alternative is to outsource, to subcontract activities performed by low-wage employees by going abroad or to self-employed contractors, since the government has as yet been unable to devise a scheme for imposing minimum wages on the self-employed. A third alternative is to automate, to substitute machines that do not have legislated minimum prices. Finally, there is the alternative of just cutting back. If minimum wages accomplish anything, they increase the employer’s costs, causing the purchasers of his product or service to search for lower-priced alternatives. This may include choosing the same products from abroad or switching, in whole or in part, to different products.

I respect the Cato Institute's economic perspectives, but again, I have yet to find any historical proof of this. Indeed, textbook economics do not always translate to reality. The discussion above makes sense from a theoretical perspective, but there are many other factors which influence the outcome. Anyway, if I'm missing something from the article that proves me wrong, give me a summary because I have too much work to do. If you guys can prove me wrong on this with historical evidence, I will gladly change my position. I am not stuck on the pro-increase side of this argument as my income is far beyond the minimum wage.

[bfp]

Originally posted by Ryan
I respect the Cato Institute's economic perspectives, but again, I have yet to find any historical proof of this.

Read the article. The proof is there. Living wages increase unemployment of low-skilled workers. Employers tend to hire more productive workers over low-skilled workers. It's not textbook economics, the proof is in the pudding...

[Ryan]

Originally posted by bfp
Read the article. The proof is there. Living wages increase unemployment of low-skilled workers. Employers tend to hire more productive workers over low-skilled workers. It's not textbook economics, the proof is in the pudding...

Like I said, summarize it. I don't have time to read that thing today.

[Adam D]

I think Ryan is right, here. What works in models and theories do not always transcribe to reality in the same way. There's plenty of research, typically, that presents both side of every argument.

You can look to the economic theories of increasing wages and how it benefits the economy, and I suspect there is more empirical proof than not on that one. Take the 1990's for example. I believe it was 1996 or 1997 that Congress passed an increase of minimum wage from $4.75 to $5.15. After this, unemployment was at it's lowest. I'm not saying it was contributory to the decrease in unemployment, but a $.40 increase per hour didn't drive unemployment up.