What Are The Changes That The Minimum Wage Go's To $14.00 Per Hour

Discussion in 'Off-Topic' started by loosewire, Jul 27, 2013.

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  1. loosewire

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    There is a big move on for drive thru's to be pushed to $14.00 an hour.

    Where would the extra money come from,that money is now going to

    stockholders. Would stockholders cut C.E.O. pay if they allowed the

    increase in minimum wage. What effect would this have on the economy.

    C.E.O.'s work for stockholders ,the economy is a house of cards.
     
  2. LDC3

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    Apr 27, 2013
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    You know where the money comes from, it comes from the consumers. The CEO, and whoever he is reporting to, will never suffer a decrease in pay (unless the company goes bankrupt). The company just increases the prices for their products to cover the increase in salaries. Which just means that there will be another debate about raising the minimum wage again.
     
  3. wayneh

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    The purpose of a minimum wage, intended or not, is an indirect wealth transfer from young, entry level workers to the labor unions. The unions support the party that in turn supports the minimum wage. In economic terms it's called "rent seeking", using the government to make sure the playing field is not level, to put your competitor at a greater disadvantage. It's indirect because it's a distortion in the labor market, not an actual tax and spend.

    It's insidious because of the apparently good intentions, which nevertheless do great harm to the people supposedly meant to be helped. It's one of the major factors causing scandalously high unemployment among young black males, for instance. It's possibly the most racist policy of our government, a wolf in sheep's clothing. A big increase in the minimum wage will really stick it to that population once again.

    In the short run, LDC3 is quite right. Costs of labor, just like more expensive gas, beef or potatoes, are born by consumers as long as the business stays afloat. If it goes under, the shareholders and bond holders eat the loss. Widows and orphans.
     
  4. GopherT

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    I have heard the number $10.10/ hr but not $22.

    This week represents 4 years since the last increase in minimum wage.
     
  5. bountyhunter

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    according to republicans, any rise in the min wage causes massive closures of small businesses and large increases in unemployment. Not really true, but they hate anything that smacks of socialism.
     
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  6. GopherT

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    About 5% of the working population makes minimum wage (or less). Therefore, the fraction of total income earned by minimum wage employees is much below 5%.

    Going back to WayneH's post, I don't know of any minimum wage jobs that require payment of union dues. I would like to learn more about these theories.
     
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  7. MrChips

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    What are the chances? 100%
     
  8. LDC3

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    It would probably be more like 30% if the minimum wage was doubled. How many supermarket cashiers make more than $12/hr? How about convenient store cashiers? Practically every business (except for lawyers and other professionals) will be effected.
     
  9. GopherT

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    You may be right but I can't find any news stories in the past month stating a proposal to DOUBLE minimum wage.

    It may have been discussed on Fox News, but all draft bills created by real politicians are proposing $10.10/hr, not 14.
     
  10. THE_RB

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    So you are saying that a high minimum wage is bad because it forces young black males to be unemployed?

    You must be preferring the alternative; that young black males have jobs, but the blacks are paid far less then whites are paid?

    For the record I'd prefer govt's to step back and stop wage fixing. I'm just curious how you reconcile the race issues you mentioned vs either system (as neither looks good to me).
     
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  11. loosewire

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    I have seen workers holding up signs for $14.00.

    I think unions are passing out signs. THEY HAVE SUPPORT FOR

    CAUSE, COMING FROM A LOT OF SOURCES.
     
    Last edited: Jul 27, 2013
  12. GopherT

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    Are these already unionized workers or are they un-unionized workers currently paid federal minimum wages.
     
  13. strantor

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    We've discussed this before, and the idea that walked away with (not sure f or who agreed with me) is that the minimum wage is like the bottom card of a deck of cards. You can just slide an additional card in at the bottom without shifting the entire deck up. Imagine a kid starts his first job at a fast food joint, at $7.25/hr (texas minimum wage) and works his way up to a manager's position at double the pay, $14.50. No sooner does he attain this lofty salary, the government jacks the minimum wage up to $14.50/ hr so the kid he just hired now makes the same wage as he does. He would in turn demand a higher salary. And naturally, his demands would be met since he no longer has any motivation to advance his career and those beneath him don't either. Why would anybody want to take on the burden of management when they can flip burgers with zero responsibility for the same wage? So now the manager has his salary increased by $7.25/hr to offset the rise in minimum wage, and the regional manager starts complaining because the branch manager is making almost $20/hr which is too close to his salary, and so on all the way up the line. So everybody's salary across the whole work force jumps either by a fixed number or by a percentage, and where does all this extra money come from? Nowhere. It is reflected in the price of goods across the board, so the cost of living spikes with the wage spike, and they cancel another out. Nobody came out ahead. It was just a big hassle for the whole country, lots of paperwork.
     
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  14. Potato Pudding

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    There is actually a solid purpose for this. Cutting wages for some work.

    Look at a sector that was previously filled by skilled trades with high demand.

    A reasonable rate of pay for that work may have been $14+ in a day when the minimum wage was $6.

    Now that work has been largely turned into plug and play, with rapid turnaround, lowest bidder commodity contracting. Demand is sporadic and often kept in house as it is much easier to just do the swaps and drops than request quotes.

    The pay rate for that work might not go up just because the minimum wage has caught up. That is the way that wages get shaken down.
     
  15. GopherT

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    Strantor,
    Your comments assume all costs of all things bought or sold are only composed of labor costs. However, everything bought or sold is only some percentage of labor. Interest payments, rent, and energy have very little to do with minimum wage.

    Finally, saying the whole minimum wage issue is just a bunch of paperwork and everyones salary goes up just because minimum wage goes up is false. If your statement were true, then the US would have had no inflation from 1997 to 2007 because minimum wage did not change in that time - $5.15/hr. Likewise, there was not a sudden 40% of inflation from July 23, 2007 to July 24, 2009 as minimum wage was increased to $7.25.

    Finally, minimum wage is thought of as the wages for teenagers and not a long-term lifestyle. However, it is also a special hell reserved for people with poor mental capacity, poor physical or mental health, or criminal record (or whatever else). Energy prices, food prices, bus fares, medical costs, school supplies, clothing, rent, ... all continue to rise, irrespective of minimum wages. The people in this special hell need a break every few years and a bit of a reset.

    I suggest we all get out and spend some time noticing those around us once in a while. Notice the clerks, the bus boys, the cart pushers, the toilet cleaners, and anyone else we see and need on a regular basis. They shouldn't have to work 16 hours per day to clothe and feed their kid. If those kids could spend some time with their parents, maybe they would turn out better and we wouldn't have to spend so much money on police, prisons and wars on drugs, anti-gang task forces, prosecutors and drug treatment centers. A community gets what it invests in its people. I didn't say "gives" to its people, I said "invests".
     
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  16. bountyhunter

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    It isn't the min wage earners who have been gutted in that last 15 years, it is actually the middle class which has been destroyed. That is why our ecnomy is so sick and having such a hard time pulling out of the current depression. A healthy economy requires a strong middle class because they are the primary consumers.

    For the record, San Francisco raised the min wage up to $10.55 some months back and we heard all the howling and whining from the people who said it would force small businesses to close, increase unemployment and the whole bit. Didn't happen.

    http://www.huffingtonpost.com/2013/01/02/san-francisco-minimum-wage_n_2397920.html

    as to the effect of raising min wage:

    http://www.raisetheminimumwage.com/pages/job-loss

    The Job Loss Myth

    The Most Rigorous Research Shows No Job Loss from Minimum Wage Increases

    (2013) reviews the past two decades of research on the impact of minimum wage increases on employment: this study concludes that the weight of the evidence points to little or no effect of minimum wage increases on job growth. The study also finds that a review of the minimum wage literature commonly cited by minimum wage opponents is flawed because it is subjective, relies in large part on studies of wage increases in foreign countries, and fails to consider the most sophisticated and recent minimum wage studies.
     
    Last edited: Jul 28, 2013
  17. WBahn

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    Mar 31, 2012
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    First off, a nationwide federal minimum wage is an absurd notion to begin with. The costs of living are significantly different around the nation. In some places a decent lifestyle can be readily maintained at not far above the minimum wage and in others you need substantially more just to make ends meet.

    Someone mentioned that San Francisco raised their minimum wage to $10.55/hr and nothing major happened. Well, anyone that predicted disaster as the result of a 3% increase in a cities minimum wage is pretty clearly speaking out their ass. The minimum wage was already $10.24/hr. To the best of my knowledge, it started at $8.50 in 2003 and is adjusted annually for inflation.

    To put that $10.55/hr in perspective, the cost of living in San Francisco is about 64% above the national average. Scaling the federal $7.25/hr by that amount makes it $12/hr, so San Francisco let's employers pay a minimum wage that is effectively below the federal wage.

    How many people in San Francisco are making less than $10.55 as it was? The Ford Foundation (hardly a conservative think tank) estimates as many as 39,000 people. In a city of 800,000 people (or right about 5% of the population). But a significant portion of those are making even less, often considerably less, than even the federal minimum wage because they are paid under the table in cash. Raising the minimum wage has no effect on them.

    San Francisco also charges about $1.50/hr per employee unless the employer offers insurance coverage and also a city payroll tax of 1.5%.
     
  18. WBahn

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    I'd say it's all but guaranteed to happen, the question is when. That would represent a 93% increase from the present $7.25/hr. Let's call it a doubling.

    The CPI has gone from 10.0 to 233.5 in the last 100 years, which is an annual average inflation of 3.20%. At that inflation rate, it would about 22 years to double. What was the minimum wage 22 years ago? It was $3.80/hr (in the process of changing to $4.25/hr), meaning that it has all but doubled in 22 years. So, barring high inflation that will hasten its arrival and recession/depressions that will postpone it, you can expect use to hit $14.00/hr for a federal minimum wave somewhere around 2035.
     
  19. WBahn

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    Just to put some objective numbers out there -- and not saying anything pro or con or anything else -- here are some historical data to place things in some meaningful perspective.

    The first federal minimum wage (that I am aware of) was $0.25/hr enacted in late 1938 It's changed at least 22 times since then ( a bit hard to say because other laws have created other minimum wages, but they were largely combined 1978). On average they have been adjusted about every four years, though the spread ranges from 1 year in times of higher inflation to as long as 10 years in periods of low inflation/recession. The following table gives the changes and also the CPI index for when the wage took effect and then what that wage was in 2013 dollars.

    Month Year Min Wage CPI 2013$
    Oct 1938 $0.25 14.0 $4.17
    Oct 1939 $0.30 14.0 $5.00
    Oct 1945 $0.40 18.1 $5.16
    Jan 1950 $0.75 23.5 $7.45
    Mar 1956 $1.00 26.8 $8.71
    Sep 1961 $1.15 30.0 $8.95
    Sep 1963 $1.25 30.7 $9.51
    Feb 1967 $1.40 32.9 $9.94
    Feb 1968 $1.60 34.2 $10.92
    May 1974 $2.00 48.6 $9.61
    Jan 1975 $2.10 52.1 $9.41
    Jan 1976 $2.30 55.6 $9.66
    Jan 1978 $2.65 62.5 $9.90
    Jan 1979 $2.90 68.3 $9.91
    Jan 1980 $3.10 77.8 $9.30
    Jan 1981 $3.35 87.0 $8.99
    Apr 1990 $3.80 128.9 $6.88
    Apr 1991 $4.25 135.2 $7.34
    Oct 1996 $4.75 158.3 $7.01
    Sep 1997 $5.15 161.2 $7.46
    Jul 2007 $5.85 208.3 $6.56
    Jul 2008 $6.55 220.0 $6.95
    Jul 2009 $7.25 215.4 $7.86


    So up until about 1950 the federal minimum wage was well below what it is presently. Then, from 1950 until August 1985 it was at or above what it presently is, spending a good portion of that time in the $9.50/hr range. Since then, it has fluctuated within about 50 cents of its present level.

    So there is plenty of meat for both sides to argue that it should be raised or that it shouldn't.

    As for whether increases in the minimum wage cause inflation or are the result of inflation, the answer is "both". Any time you increase the minimum wage it is going to have some inflationary pressure. The more the increase, the more the pressure. But to the degree that the new wage is just making up ground for loss due to inflation since the last adjustment, that pressure will be muted and transient.

    What will have the minimal disruptive impact while keeping the minimum wage consistent with buying power would be to adjust it on January 1st each year based on the October CPI index of the previous year, rounded to the nearest 10 cents. Coincidentally, if you take the current CPI and divide it by thirty, you would get $7.80/hr, which would bring it back to right about what it was as of the last adjustment.

    This would make the average annual increases in the 20 to 30 cent range, which are small enough not to cause significant disruptions. Even more important, they are increases that would be expected and could be planned for well in advance. Another thing it would do is remove the bulk of the contention over whether to raise it or not. You set the factor that you use relative to CPI once and what you are determining is what buying power the minimum wage should have. After that, it only needs to be revisited when the claim is that the minimum wage should have a different level of buying power.

    If this approach is taken, it would be necessary to allow the minimum wage to go down if that is where CPI goes. But, as with the rate at which they go up, if they go down it would be in small increments, probably seldom more than a dime.
     
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  20. loosewire

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    W.. Bond Here , good research.. tells it all.
     
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