Tuesday, September 3, 2013

The Moral And Economic Case For The Minimum Wage?

We are fighting for an honest day’s pay for an honest day’s work. It is a moral and economic imperative that we raise the federal minimum wage. People who work full-time in America shouldn’t live in poverty.

-- Labor Secretary Thomas Perez

Uh huh. Let’s look at this shall we?
An honest day’s pay for an honest day’s work.
A wage is set when one person says, “I am willing to pay X for someone to labor for me,” and when someone else responds, “Sure, I’ll labor for that.” There is nothing more honest than that. Both parties have placed a value on the labor and they agree on that value. How is that dishonest in any way?

Dishonest is not paying what you promised. Dishonest is forcing someone to work or cough up part of their wages... like unions do and government and the mob. Nice company you keep Perez. The truth is that the free market provides the honest wage, it’s the government who tries to impose dishonesty.
Moral imperative to raise the minimum wage.
What exactly is the moral case for the minimum wage? Wages are reached by the consent of those who will do the paying and the working. What is the moral case for some a-hole bureaucrat substituting his judgment about what should be paid? Perhaps if people were being forced to work at some price, then I could agree, but there is no such force. There is more than enough of a safety net to avoid working if the offer is too low and there are many means to increase your value so that others will bid for your services. There is nothing moral about forcing one side in a transaction to pay more just because someone claiming to speak for the other side thinks they should... dictating what someone will contribute is immoral, it’s called slavery.
Economic imperative to raise the minimum wage.
Ha. The economic case against the minimum wage is clear. It kills jobs. It artificially makes workers more expensive without the dictates of supply and demand. That means employers will find ways to work with fewer employees... the phrases “work harder” and “replaced by a machine” come to mind. When someone talks about the “case for raising the minimum wage,” what they are really saying is “I want to sooth my conscience by pretending to help poor people, when the reality is that I’m encouraging employers to wipe out the very jobs poor people need to build their lives.” And not only does this wipe out jobs, but since the workers are still floating around, it results in lower wages for those with jobs and more power to employers to demand more work for less money because the workers are more easily replaced by the newly unemployed. Maybe this should be under the moral argument?
People who work full-time in America shouldn’t live in poverty.
Agreed, but who are you talking about and how does raising the minimum wage help this problem?

The federal minimum wage has crept up to $7.78 an hour. That’s $16,182 a year if you work full-time. The federal government defines poverty as follows. For a one person family, it’s anyone earning less than $11,490. Hmm. For a two person family, it’s anyone earning less than $15,510 a year. Hmm. Strange. So someone working at the minimum wage for 40 hours a week for a year is above the poverty level even if they have a non-working spouse. It’s not until they add a child that they hit the poverty level: $19,530.

So let’s make this statement more honest: “People who work full-time in America with a non-working spouse and one or more children shouldn’t live in poverty.” Doesn’t quite have the same effect does it?

Now let’s add the obvious: no one who is offering “an honest day’s work” gets paid the minimum wage for very long. McDonalds starting wages are $7.85. Within a couple years of showing you can do your job, that goes up to $9.45. That works out to $19,656. Thus, you would now need a second child and a non-working spouse to qualify as “living in poverty.” Heaven help you if your lazy-ass spouse also worked at McDonalds. Then you’d need four kids just to keep that fun “in poverty” label.

Perez is shadowboxing against a straw man here. There is no one who works full-time and falls into his definition except by choice... too many kids, nonworking spouse. Having one of these jobs will never buy you a mansion and it won’t be as fun as coaching a professional football team, but you won’t live “in poverty” either as Secretary Perez wants you to believe. Moreover, over time, you and your spouse will actually slowly creep your way into the middle class. And if you work more than 40 hours, as every professional I know does, then you can go a lot higher than lower-middle class. Two spouses working 60 hours a week at minimum wage earn $49k a year and almost $60k at McDonald's non-entry wages.

What would help here would not be a raise in the minimum wage -- which would cost many their jobs, depress wages, and reduce employee bargaining power. What would help would be slashing the taxes on the wages these people earn and incentives for McDonalds to hire more people. More jobs in the same labor market means higher wages and more power for employees. That’s what’s really needed.

44 comments:

Individualist said...

To me the minimum wage is more about controlling the rate of inflation than it is about helping poor people. We have been living under one aspect of a Keynesian economic philosophy (even under Reagan) that teaches that economic growth is aided when the government borrows from GDP. This borrowing ends up pushing an inflationary rate that is considered controlled when it is 2-3 % a year. So how does the government control the raise in prices as money inflates so that wages increase at a constant rate.

Wala! Minimum Wage. Raising the minimum wage does not just manage the lowest level of wages paid. Many union contracts and companies match their wager increases to the minimum wage. After all if you are McDonalds and your experienced worker make 9.45 an hour if the government mandates that as the new minimum wage well you now have to pay them 11.00 an hour to keep them.

I started work in the 1980's when the minimum wage was 3.35 an hour at Arby's. At that time the Super Roast Beef, fries and a drink was about 3.50. As the minimum wage has risen I have noted commensurate increases in the price of the premium burger fries and a drink. It always seems to cost about what the minimum wage would pay for one hour of work. This is anecdotal but it has been pretty consistent in my observation.

In the end we must remember money is an illusion. The dollar only has value equal to what you and I agree that it is worth. You can't legislate an increase in the value of someone's work. You can only legislate the number of imaginary units that we should measure one hour of that work. Just my two cents.

AndrewPrice said...

Indi, I concur, especially with this: In the end we must remember money is an illusion. The dollar only has value equal to what you and I agree that it is worth. You can't legislate an increase in the value of someone's work.

The Democrats pretend that they are magically increasing the value of people's labor by raising the minimum wage. But it's an illusion. Yes, they earn more units, but the value of those units decreases offsetting what they make and making life harder for everyone else.

Anthony said...

Great article. Shouldn't need saying but sadly it does.

BevfromNYC said...

Yes, this is huge topic with our mayoral candidates (Dems, of course) who are pretty much promising to give away ALL the "the rich people's" money if they could just get our votes.

Here how that's going:

Hey poor people! You want a $15 (true) minimum wage? You got it, but you have to vote for me! You want me to line the rich up and shoot them if they don't comply? Okey dokey, just vote for me?

Hey rich people, not to worry, we're just pandering, Btw, can you spare a few thousand more in "charitable" contributions. I need to print some more fliers)

Hey middle class! Middle class?? {{{crickets}}} ah, never mind, we got nothin' for you anyway...

T-Rav said...

Oh, bite me. (Not you, Andrew.) I make $13,500 a year, which works out to less than the minimum wage, and I'm not starving to death. Heck, I can afford three square meals a day, a nice apartment with cable and Internet, a quality car, etc. Yes, I get helped out a little from my folks, but I could do without that if I absolutely had to.

I wonder what quality of life these poor minimum-wage folks have. Probably upset because they can't pay for HBO this month.

(rant off)

BevfromNYC said...

T-Rav - I think they base this on NYC living standards. It is true, no one can survive in NYC on minimum wage where the average cost for a rental is $3017 @month plus utilities, food, transportation etc. The national rent average is $1062 @month. And to make it even worse, the state just approved a raise to the minimum for NYC from $7.25 to:

•$8.00 on December 31, 2013
•$8.75 on December 31, 2014
•$9.00 on December 31, 2015

It sounds great until the minimum wage jobs start drying up because small business owners can't afford to pay or don't want to...

AndrewPrice said...

Thanks Anthony. Sadly, this is something too many people just don't understand. They think you can magically raise everyone's prosperity by legislative fiat, but you can't... you only end up hurting people.

T-Rav said...

Bev, that's not actually such a big problem, the small businesses not wanting to hire in the first place. The city will solve matters by requiring them either to hire or not to fire anyone, ever. Easy-peasy.

I will never understand why my sister wants to move there. (Well, actually I do, but I don't understand why she's so deliberately tone-deaf regarding the fine print.)

AndrewPrice said...

Bev, That's all this is about -- pandering. Everyone in politics knows it. The Democrats know this doesn't help anyone, it just sounds good an stupid people believe it. And since stupid people often work near the bottom of society, they love this stuff.

I'm not at all surprised that NYC is awash in class warfare. That seems to be the hotbed of it. I suspect the missing middle class is what causes it. I would bet most of them live well outside the city.

AndrewPrice said...

Bev, These numbers are "national" which generally means worst case scenario to scare people. In my experience, nobody earns minimum wage in big cities because they can't get people to work for that.

And don't forget, welfare underpins the real minimum wage in an area. And in some big city areas, welfare pays in the mid-$20k per year. No one will work for $7 an hour in those places. That's why even McD's pays a lot higher in those areas.

AndrewPrice said...

T-Rav, And don't forget that you can share rent with a roommate or get a working spouse and then you can afford even more.

What they are trying to do is to raise the minimum wage to recreate the middle class jobs of the past by fiat... so you can have kids, a house and a stay-at-home spouse all from working at McDonalds or as a janitor.

AndrewPrice said...

T-Rav, There are a lot of reasons to move to a big city. Higher wages make things like cars and student loans more affordable. Better jobs. More stuff to do. More young people.

tryanmax said...

No discussion of the minimum wage would be complete without THIS.

AndrewPrice said...

That was mesmerizingly strange.

Critch said...

With one parent working full time at minimum wage ($7.35/Hr)in our state with a non-working spouse and 2 kids...you are still eligible for $400.00/mo in food stamps, Medicaid for the family and depending on some circumcstances around $300.00/mo in cash assistance..this is not to mention the help with utility bills etc.

AndrewPrice said...

Critch, Good point. They are selling this idea like these people are just thrown to the wolves, and they aren't. The food stamps are worth $5k a year. As Obamacare has shown, the Medicaid is worth is $12k a year. Their kids will get subsidized school lunches. They will get help with heating and electricity... and an Obamaphone. If their kids go to college, they will get grants rather than loans.

So much for the image Perez paints.

Critch said...

With the way our media and government work and act I sometimes think I'm in a banana republic. The lies and distortions that the media paints are phenomenol.

AndrewPrice said...

Critch, I feel the same way sometimes... lots of times.

K said...

It gets annoying to have the political agenda being constantly ordered by the left. A function of having the media as ministry of information.

Personally, I'd prefer to debate the moral and economic case for not bankrupting the country.

BevfromNYC said...

***News Break***
Statement by John Kerry

"...President Obama is not asking America to go to war,” Kerry said, testifying before the Senate Foreign Relations Committee, noting that there would be no American “boots on the ground.”

Obama, he said, was “asking only for the power to make clear, to make certain, that the United States means what we say … He’s asking for authorization to degrade and deter Bashar al-Assad’s capacity to use chemical weapons.”


So I just have a few questions and comments. This isn't a "war", it's what then? A situation? A war-lette? What else is it called when we bomb the crap out of someplace?

And exactly what is the point of going in if we are not going to seize ALL of and eradicate the chemical weapons. AND if there are no "boots on the ground" how will we seize these chemical weapons - teleportation or by using the tears of unicorns to render them harmless?

And, uh, let's be even more clear...this is to make sure OBAMA looks like he means what he says, not the US. The rest of us know that when you draw a red line and say "Don't cross this red line" and they do, you have to be ready to make good your threat. You CANNOT go "Oops, did I put that red line there? I meant to put it over there where no one could reach it. Sorry, I will get back to you tomorrow, next week, or sometime later, First, I have to go ask my mom and dad, if it's okay. Usually they don't let me bomb another country until after they decide. You see, I didn't know that..."

Oh, btw, this has given the Syrians (whatever side) time to move all of those chemical weapons to civilian areas. I can't WAIT for us to start bombing schools and hospitals! That's going to be fun and makes us look so much better in the eyes of the world that Obama is making good on his promise...end rant...

***END NEWS BREAK***

Barack Obama (to the tune of "Blurred Lines") said...

I hate these red lines.

AndrewPrice said...

LOLOLOLOLOLOLOLOLOL!!!!!!

So Obama isn't asking to go to war... he just wants permission to slap Syria around a little.

... like a pimp.

AndrewPrice said...

I have to admit, I like "Blurred Lines." It's a fun video and an ok song.

AndrewPrice said...

K, We need a better organized right if we want to drive the debate back in the right directions. We need people who can find issues and who can explain those issues in ways that will interest people while making sense.

Marvin Gaye said...

I know, I wish I'd come up with a tune like that!

AndrewPrice said...

In all seriousness, I really don't hear the two songs as similar.

T-Rav said...

Andrew, fair enough, although my sister's rationale runs more along the lines of "OMG everyone's so smart and sophisticated there and I won't have to deal with all these stupid Christian racists!" And maybe more stuff to do.

Stupid cities.

AndrewPrice said...

T-Rav, There's an old quote I wish I could find about fools wishing for other locations and other times when the real problem lies within. Best of luck to your sister in escaping her personality defects.

BevfromNYC said...

"OMG everyone's so smart and sophisticated there and I won't have to deal with all these stupid Christian racists!"

T-Rav - Tell your sister to be prepared to be really disappointed...

tryanmax said...

Okay, I'm listening to the Marvin Gaye song that Robin Thicke supposedly ripped off right now and I'm totally not hearing it. The drum loop is similar, that's about it.

AndrewPrice said...

They claim it has the identical base line. I don't hear that at all.

Also, Gaye said it's not a copy, but the people who own the rights to Gaye's stuff say it is, and the critics are really the ones pushing this.

T-Rav said...

Bev, you mean there's right-wing Christian bigots in the Big Apple too?! All is not lost! :-D

Andrew, I'd say more along that line, but in truth, I have the same personality defects she does. We just direct them at different people.

T-Rav said...

I hear some similarities between the two songs--not really enough to claim copyright infringement or whatever--but I really don't care. I care more that Thicke has bragged that his song is about degrading women and apparently backs that up by acting like a total hound dog while publicly claiming to be a happily married man.

That being said--yeah, the tune is kind of catchy. Darn it.

AndrewPrice said...

T-Rav, Bev, you mean there's right-wing Christian bigots in the Big Apple too?! All is not lost! :-D

No. The people just aren't smarter or more sophisticated and they are just a different version of racists.

tryanmax said...

What Thicke's critics don't realize is that there are a finite number of elements from which to construct a song. Once you start breaking them down into genres, the similarities increase. So, to an extent, all funk does sound alike, otherwise it wouldn't be funk. Same with every other genre.

If NYC is anything like Chicago (and I know the latter aspires toward that) then, yeah, I didn't really know what a bigot was until I got to the Big City.

Individualist said...

Bev

I believe it is called a police action to use the Vietnam vernacular. It does not become a war until a Republican is elected President.

AndrewPrice said...

tryanmax, I concur.

As for bigots, the biggest bigots I even met were in Boston. They are uber-racists.

Koshcat said...

Obama is just jealous of all those Clinton murals in Kosovo.

BTW, great article Andrew.

BevfromNYC said...

T-Rav, Andrew, and Indi -

Andrew and Indi hit it right. I was shock at the racism in NYC and I grew up in the South! I chalk it up to a much wider range of people to hate. And the range of stupid and unsophisticated is wider exponentially. I, of course, am the exception. I am brilliant and sophisticated, and a lover of all peoples everywhere...except in DC. ;-D

BevfromNYC said...

Indi - I forgot about "police action"!

AndrewPrice said...

Thanks Koshcat!

Somehow, I can't imagine Obama murals in Syria.

AndrewPrice said...

Bev, Policing is so right-wing. How about "Counseling From Above"?

AndrewPrice said...

BTW, as I said above, the most racist, ignorant people I've ever met are the good people of Boston... all of them.

T-Rav said...

Wasn't in Boston long enough to get their views on other races, but....doesn't really surprise me.

As far as New York goes, I've heard the theory batted about that, for all the talk about a "melting pot," the different ethnic communities there stayed separate for a very long time, to an extreme degree. Even the Norwegians and Swedes tended not to intermingle, and nobody even knows there's a difference there. So in a situation like that, it doesn't surprise me that there would be a lot of ready-made ethnic tensions.

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