I think the true prinicple of capitalism is that the buyer and seller both have equal power. If the wage is too low people are free not to work that job. Any type of price fixing is really just unbalancing capitalism and fixed high wages is heading towards socialism in my mind.

As for "what would happen" well generally there would be more people employed but at lower wages. Which makes sense if the wages are artifically fixed high now, so less people are employed but at artificially high wages.

I would argue about rents and living costs being high, people want to live in expensive neighbourhoods in plush housing and drive BMWs and have multiple big screen TVs. But really people are free to live in much cheaper parts of the country is less glamorous housing and drive a cheaper older car. The only reason a hard working person struggles to make ends meet is because they spend too much money on trying to live at too high a standard.

Let's face it what do you really need? A safe roof to sleep under and some quality food to eat to stay healthy, and a bank account to put the savings in as they build up as the results of your hard work. If you read the book "The millionaire next door" about self made millionaires in America there is a constant underlying theme; working hard to make money and not wasting it on high rents, nice clothes and flashy cars. The self made millionaires all drove modest cars and lived in very modest housing (compared to their incomes).

 

These concepts, both mine and others, border on politics at its most basic. It will get people hot and bothered, it did me.

I'll watch this thread and bite my tongue, something I am lousy at. I suspect it will have a very short life before it gets locked. Since I am biased I will ask other moderators to keep an eye on it.

Economics can be (and often is) politicized. But need that be the case here? I think we've had a pleasant discussion of economic theory (wrt minimum wage) so far without devolving into a political flame war.

And nobody's invoked Godwin's Law yet.

 

I'm not sure what effect abolishing the minimum wage would have on the economy, but I feel that it should exist.
All these low paid jobs have to be done, we need nurses, shopkeepers, waiters and all the other jobs.
Some of the people doing them are our relatives and friends, and the reasons they do them is not because they are lazy, but because they can't (or don't want to) find higher paid jobs. Considering that they are doing jobs that most of us (at this forum we are probably mostly above average in ability) don't want to do, but are beneficial to us.
Should they not have enough money to eat well, get medical insurance, maybe have a holiday once in a while, have time to spend with their children and bring their children up well enough so they have a chance in life?
Sure it costs the better off a little more to eat or shop, or eats into the profits of the companies employing them, but I think that's a small price to pay.

 

If "big business" had their way, things would go back to the way it was before unions. Workers would live in "company" housing and have to shop in the "company" stores. Cost of housing and everything else would be set by the "company" and most workers would owe more than they make. Basically paid slavery.

Why is it always the minimum wage workers and even the standard wage worker that is to blame for the economy? The top dogs of industry and banking who make the big wages and don't add to the value of a product or service are never to blame. At one time the top dogs were worth the money , when they were the ones that invested their own money into starting a company. But today a CEO or what ever title they have is just a politician within a company. Why isn't their wage scrutinized and made to reflect their contribution to a product or service?

 

If "big business" had their way, things would go back to the way it was before unions. Workers would live in "company" housing and have to shop in the "company" stores. Cost of housing and everything else would be set by the "company" and most workers would owe more than they make. Basically paid slavery.

I strongly doubt that would happen if minimum wage was abolished. All of the reasons unions had to exist (which were legitimate at the time) have been covered by many Federal laws since the "Company Store" days. OSHA, Child Labor Laws, Right to Work laws, and dozens more.

And don't even get me started on public sector unions, such as DMV, Clerks, etc. The state has fixed $x dollars to pay their employees (no profits), the employees essentially blackmail the state (that'd be non-gov taxpayers) into paying them more until the state can't afford it.

 

If "big business" had their way, things would go back to the way it was before unions. Workers would live in "company" housing and have to shop in the "company" stores. Cost of housing and everything else would be set by the "company" and most workers would owe more than they make. Basically paid slavery.

That's along the lines of what I was thinking. I was actually thinking that companies might slowly migrate towards price fixing very low wages. In the same way that cable companies seem to all work in cahoots to drive the cost of cable packages up, all companies would work to drive the wage down, and not just those at the bottom would feel the effects; all wages would slowly sink in unison, following the lower tier wages.

Why is it always the minimum wage workers and even the standard wage worker that is to blame for the economy? The top dogs of industry and banking who make the big wages and don't add to the value of a product or service are never to blame.

It wasn't my intention to blame minimum wage workers for the economy. The topic at hand in the minimum wage, and most closely associated with the minimum wage, is the minimum wage worker, so that's who got the spotlight. I agree with you about the bankers, but that's whole different discussion.

 

The topic at hand in the minimum wage, and most closely associated with the minimum wage, is the minimum wage worker, so that's who got the spotlight. I agree with you about the bankers, but that's whole different discussion.

No, you cannot separate the two. That is why wages are kept low in the first place. The rich get rich on the backs of the working class.

 

No, you cannot separate the two. That is why wages are kept low in the first place. The rich get rich on the backs of the working class.

ok, point taken, but I would prefer to keep the topic focused on the minimum wage (not minimum wage workers). You could bring any class/group into the discussion; point the finger at anyone, as all are connected via the economy, but that's not the point. I'm not pointing any fingers at anyone. I'm discussing the theoretical effects on the economy of removing the minimum wage.

 

I would argue about rents and living costs being high, people want to live in expensive neighbourhoods in plush housing and drive BMWs and have multiple big screen TVs. But really people are free to live in much cheaper parts of the country is less glamorous housing and drive a cheaper older car. The only reason a hard working person struggles to make ends meet is because they spend too much money on trying to live at too high a standard.

so what about hard working people who work two/three jobs and do not live in the glamorous house but rent a basement suite and have a beat up car trying to support their kids? those don't exist or tough luck?

 

@oneguy, I highly doubt it, many of these jobs illegals take are jobs US people would not take, 1 because of incredibly low pay, but also safety reasons. Have you any idea the health problems these immigrants get after many seasons of picking pesticides and fertz? When I was young I live in Tabaccy country. All the migrants would get sick from some kind of poisoning in the plants oils, or pesticides. So while you say cut off all aid and US people would go work there. That fine but food prices will go up x 10 because of all the modifications needed to make it safe for US workers. Immigrants we don't care about so when they're working the fields "Whip out the DDT and get to work!"

 

I am sorry to have to say this, but I think that many people form the opinions that best suit their own interests. The poorer man pleads for minimum wages and welfare, even when there is not enough wealth overall to allow us to be as well off as before, and when trying to maintain previous standards of living can lead to the problems that are currently being played out in Europe.

The entrepreneur on the other hand talks of self reliance, fostering a lean and prosperous society, and the individual's responsibility for his own welfare, but perhaps at heart he just wants to be sure of being as rich as possible while ensuring that people lower down the heap get the absolute minimum.

In the end, surely morality has a place in this. Does that sound old-fashioned? Perhaps it does, but without it we cannot expect to do much better than a pack of dogs. And morality apart, don't we want to try to avoid society disintegrating so far that we all end up suffering.

To me then the conundrum is how steer a path between the culture of welfare and dependency, and a society that becomes so polarised that it revolts and descends into anarchy. For as much as we may hope for improvement following the end of a despotic regime, history shows us that very few revolutions end in lasting success

 

I dunno I don't think our country is hard to fix at all. Even the immigrant problem is easily fixed with common sense. Heres how maxpower would fix the world!

1.Legalize Marijuana and have the gov, and pharmacies work with mexicans and columbians to produce medicinal quality marijuana. Then cut out the cartels and take it from mexican grower to dispensory taxing it along the way.

2. Buy up all the opium the middle east produces to make legit painkillers rather then buying it from US pharma-farms that charge 50X the price. This would take a ton of money away from the terrorist like it would the cartels.

3. Tax chinese products imported into the united states 300% no deals, or breaks!

4. Abolish political parties

5. Send a monkey to mars.

END WORLD FIXED!

 

@adjuster, History also show us very few governments have lasting success.

 

I would argue about rents and living costs being high, people want to live in expensive neighbourhoods in plush housing and drive BMWs and have multiple big screen TVs. But really people are free to live in much cheaper parts of the country is less glamorous housing and drive a cheaper older car. The only reason a hard working person struggles to make ends meet is because they spend too much money on trying to live at too high a standard.

I respectfully disagree. The demographic you point to does exist, but is not representative of every "hard working person struggles to make ends meet." The minimum wage here is 7.25$/hr. If a person were to work 40hrs/week, that's 15,000$ annually, or right at poverty level for a family of 2. So said person can get a 2nd job and work 80hrs/wk for an income of 30K/year. I don't care what the BLS says "poverty level" is; 15k/year is barely enough for a single guy to eat ramen noodles, ride a bike, and live in a crappy apartment, much less provide for a family. 30k/year is enough to live on, if you consider working 80hrs/wk "living". Lucky me; I make another minimum wage yearly pay on top of that and only have to work 60-70hrs/week. Still can't afford my own car though; I borrow a '96 corolla from my mom. I guess you could say that my problem is the fact that I rent a single family home instead of one of the apartments in the den of theives and crackheads across the street, but hey, I have to provide the safest place possible for my family. And I might add that all my big screen TVs I got out of the trash and fixed .

When I am making an arguement, I get preturbed when someone trys to shoot down my generalization with one exception to the rule, but I really don't think the generalization you've made is "the rule." I think its a misconception that may have been true years back, but not anymore.

 

I think the simple answer is that the elimination of the minimum wage would drag all wages down. In this situation goods and services at current prices would be unaffordable and markets would shrink causing prices to drop resulting in a deflationary death spiral.

I might be willing to take this risk if it would drop CEO pay to say 35 times the average workers pay. Would you be willing to make the same bet?

 

Just like family. Holiday's are over, so everybody goes for throats in an allegedly taboo topic.

I guess I'll go take off my hat.

 

I think the simple answer is that the elimination of the minimum wage would drag all wages down. In this situation goods and services at current prices would be unaffordable and markets would shrink causing prices to drop resulting in a deflationary death spiral.

I might be willing to take this risk if it would drop CEO pay to say 35 times the average workers pay. Would you be willing to make the same bet?

That's what I thought when I started this topic. I was going to make a point, which apparently I forgot to type, that I think the minimum wage is like a blue book value. The blue book value of a car does not determine the value of the car, but it is a universally accepted starting point for negotiations to take place. I think people base the value of work with respect to the minimum wage, but I could be wrong. I'm not sure on this point, and the more I think about it, the less I understand.

Just like family. Holiday's are over, so everybody goes for throats in an allegedly taboo topic.

I guess I'll go take off my hat.

lol did you bring your gloves? what's taboo about it BTW?

 

lol did you bring your gloves? what's taboo about it BTW?

I detect the strong odor of politics.

 

I detect the strong odor of politics.

There is a strong chance of someone veering off into politics, I agree. But, so far we've been responsible; kept it between the lines, and I think we can continue to do so. It would be senseless to go there, as this is really about numbers.

 

The more I think about this, the less clear it seems. Unfortunately, I don't think any of this can be more than opinion for most of us. Could removing minimum wage rates really precipitate a demand collapse? Is there such a thing as a mathematical model which could predict that with any degree of certainty?

I started out thinking that removing the minimum wage would on the whole be helpful, albeit in a limited way and with some risk of increasing the conflict between rich and poor. The idea of it triggering a more profound recession is a frightening one. Perhaps it would be wise not to do anything too precipitous.