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Minimum Wage
Raise it, Lower it, or Keep as is?
Raise it, Lower it, or Keep as is?
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Minimum Wage
03-21-13 08:31 PM
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Raising the minimum wage is a bad idea.
Here's a brief economics lesson for everyone. Let's say I'm a fast-food restaurant. I have 10 workers who I pay each $7 an hour. That's $70 an hour total just in labor costs. Business is doing fine, though I'm not really expanding anywhere, so I can only afford to keep $70 worth in workers. Then I find out minimum wage has increased to $10 an hour. Well now I have to fire 3 or my workers just to keep labor costs the same. But now I'm producing less because I have only 7 workers instead of 10. In return, I have to increase the price of my burgers just to keep the same profits I was getting before. Thus: higher wages = higher costs of production = higher prices for the consumer. That's bad for us consumers. That's bad for employers. And that's bad for the unemployment rate. So keep minimum wage where it is today. Or if you really want to create some change, reduce the minimum wage. Here's a brief economics lesson for everyone. Let's say I'm a fast-food restaurant. I have 10 workers who I pay each $7 an hour. That's $70 an hour total just in labor costs. Business is doing fine, though I'm not really expanding anywhere, so I can only afford to keep $70 worth in workers. Then I find out minimum wage has increased to $10 an hour. Well now I have to fire 3 or my workers just to keep labor costs the same. But now I'm producing less because I have only 7 workers instead of 10. In return, I have to increase the price of my burgers just to keep the same profits I was getting before. Thus: higher wages = higher costs of production = higher prices for the consumer. That's bad for us consumers. That's bad for employers. And that's bad for the unemployment rate. So keep minimum wage where it is today. Or if you really want to create some change, reduce the minimum wage. |
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03-21-13 09:00 PM
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Someone70 : Economics is not that simple. Let's take your restaurant example. If you as a business owner cannot afford an additional three dollars an hour for a worker, you have far greater problems than the minimum wage. Unless your business is failing already, the extra three dollars an hour will not hurt your bottom line. Furthermore, the additional money for workers means that they are able to spend more and invest more in the economy. Because there are far more workers than there are business owners, who have more basic necessities to buy, the wage hike means money is being more rapidly channeled back into business, which improves the economy. Furthermore, the additional money for workers means that they are able to spend more and invest more in the economy. Because there are far more workers than there are business owners, who have more basic necessities to buy, the wage hike means money is being more rapidly channeled back into business, which improves the economy. |
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03-21-13 09:08 PM
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Traduweise : The example was on a small scale to illustrate a point. If I was McDonalds and had 100,000 minimum wage workers, that's $100,000 extra that I'm losing every hour, or $2.4 million a day.
And not everyone is a minimum wage worker. Those that are will re-invest in the economy, yes, but it might not be enough to offset the costs that you're losing. Additionally, you'll have much fewer customers than before, including the minimum wage workers, because you'll have increased your prices. Raising minimum wages is good for the average poor American or working college student, yes. It can probably give them a chance to raise their standard of living. But what irritates me is that the government is always talking about creating more jobs, but all that increasing minimum wages does is decrease the jobs available and increases unemployment. It's really not the best idea for improving the economy. And not everyone is a minimum wage worker. Those that are will re-invest in the economy, yes, but it might not be enough to offset the costs that you're losing. Additionally, you'll have much fewer customers than before, including the minimum wage workers, because you'll have increased your prices. Raising minimum wages is good for the average poor American or working college student, yes. It can probably give them a chance to raise their standard of living. But what irritates me is that the government is always talking about creating more jobs, but all that increasing minimum wages does is decrease the jobs available and increases unemployment. It's really not the best idea for improving the economy. |
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03-22-13 12:26 AM
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Someone70 : On the contrary, small scale examples are typically used in this case because the argument typically goes that small businesses are the ones that lose out. When you use large examples, numbers also become larger. 2.4 million dollars might look like a huge amount, but when you consider that 100,000 workers are probably staffing thousands, if not tens of thousands, of restaurants that each make and spend at least tens of thousands of dollars a day, you realise that context is everything. 2.4 million dollars is a large sum, but spread out over 100,000 people, it is neglible. To a large corporation like McDonald's it's virtually nothing. As for the rest of your claims, I see no reason to accept that any of them should be true. You have no supporting arguments or sources. Simply put, a small minimum wage hike will not hurt the economy, and it certainly won't result in fewer customers (because the workers are making more on average and thus have more to spend). As for the rest of your claims, I see no reason to accept that any of them should be true. You have no supporting arguments or sources. Simply put, a small minimum wage hike will not hurt the economy, and it certainly won't result in fewer customers (because the workers are making more on average and thus have more to spend). |
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03-22-13 01:10 PM
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Alright, I'll be more blunt: Minimum wage does nothing but inflation. They will temporarily make more, but prices will increase. The poor now have more money, so more money is injected into the economy. Increase demand. Therefore, since supply hasn't been touched, increase costs. Increased cost means that extra money the poor are getting? Well, they're not really getting any more. The extra money they get, in the end, is the extra money they'll pay. Ultimately, it helps no one. Minimum wage does nothing but inflation. They will temporarily make more, but prices will increase. The poor now have more money, so more money is injected into the economy. Increase demand. Therefore, since supply hasn't been touched, increase costs. Increased cost means that extra money the poor are getting? Well, they're not really getting any more. The extra money they get, in the end, is the extra money they'll pay. Ultimately, it helps no one. |
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03-22-13 02:09 PM
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Txgangsta : You cannot demonstrate that raising the minimum wage, especially by a small sum such as one dollar, will have a discernable affect on inflation. That's because economics is considerably more complex than your "blunt" assessment. There are many variables affecting inflation, and when you look at only a single factor, you cannot hope to be accurate. For instance, the minimum wages were recently raised by $1.50 here in British Columbia. There has no noticable increase in inflation to accompany this. Even if the wage hike did indeed lead to an increase in inflation, it was cancelled out by the dozens of other variables. The simplest answers are generally the most wrong. The simplest answers are generally the most wrong. |
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03-22-13 02:55 PM
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Traduweise : "Your assessment is too simple" is the worst reason I've ever been told on why I'd be wrong. You say, "there are many variables affecting inflation", but you fail to mention that minimum wage is one of those variables! Sure, you can control inflation by other means, but if you raise minimum wage you HAVE to control inflation. It's one of those variables! I much prefer to taxing the rich than giving to the poor. Taxing the rich gives you an extra option to control inflation: governmental surplus. Taxing the rich and spending money on those poorer is so much better than just flat out handing cash over to people. I'd rather have funding for improving society than more flat screen TVs. Taxing the rich and spending money on those poorer is so much better than just flat out handing cash over to people. I'd rather have funding for improving society than more flat screen TVs. |
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03-22-13 03:39 PM
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How does the poor staying poor as possible help to jump start the economy? |
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03-22-13 04:05 PM
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My claim is that they don't get any richer if we raise minimum wage. They do get richer if we: 1) Increase the worth of the dollar 2) provide them with goods/services (really broad) Just giving them more money will only devalue the dollar. I'd rather take that money we would be giving them and spend it on schooling or some program directed on decreases income disparity. 1) Increase the worth of the dollar 2) provide them with goods/services (really broad) Just giving them more money will only devalue the dollar. I'd rather take that money we would be giving them and spend it on schooling or some program directed on decreases income disparity. |
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03-22-13 04:11 PM
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Forget the wages. Lower the prices of everything else.
The rent is terrible. Good Luck To All. Peace. The rent is terrible. Good Luck To All. Peace. |
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03-22-13 04:33 PM
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orionfoxgibson : I hear this. The rents go up every higher each year. Tie them to the index at least I say or put the property owners on a leash. Plus I never said some standard minimum wage would solve anything, I am just against the living standards being high when you get nothing out of honest work does nothing good to the economy either, unless you are some filthy rich you know what. I hear this. The rents go up every higher each year. Tie them to the index at least I say or put the property owners on a leash. Plus I never said some standard minimum wage would solve anything, I am just against the living standards being high when you get nothing out of honest work does nothing good to the economy either, unless you are some filthy rich you know what. |
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03-22-13 06:04 PM
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Txgangsta : No, I certainly did mention that wages are a variable affecting inflation. One variable. Since you feel so strongly on the matter, why not go ahead and show just how strong this effect is? And how one controls for it through a multitude of variables, many of which are far stronger than a small minimum wage hike. Some real life examples of these principles would be nice as well. Time to back your claims up, no? |
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03-22-13 06:10 PM
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It shouldn't be raised. It should be abolished. All it does is create unemployment. Usually in young unskilled workers. Say they raised the federal minimum wage law to $11 an hour, then every worker that is not productive at that wage won't have a job for very long. Really what it does is arbitrarily help the more productive workers in the burger joint or grocery store at the expense of the less productive. If really raising wages were so easy why not just raise it to $40 for every worker? $50? The only way wages can truly be raised for everyone is for innovations in technology that will make workers more productive. Here's a good article. http://mises.org/daily/2130 Here's a good article. http://mises.org/daily/2130 |
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03-22-13 08:34 PM
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coreyadk12 : How about just raising it 50 cents? And no, Ludvig von Mises can be thrashed and shoved up who knows where. Well I am sure many rich people read him more than the bible. How about just raising it 50 cents? And no, Ludvig von Mises can be thrashed and shoved up who knows where. Well I am sure many rich people read him more than the bible. |
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raising the minimum wage doesn't make anyone wealthier. Inflation has probably outpaced minimum wage for a while.
I think the real problem isn't the minimum wage but multinational corporations. Too much money is given to the owners (shareholders) of companies who do little to no work for the company, while the people doing the actual work get paid very little. I think if we rewarded work rather than ownership more this wouldn't be a problem at all. However, I don't see any reason why legislating a minimum wage to be higher will make this happen. You can't legislate equitable pay. I think the real problem isn't the minimum wage but multinational corporations. Too much money is given to the owners (shareholders) of companies who do little to no work for the company, while the people doing the actual work get paid very little. I think if we rewarded work rather than ownership more this wouldn't be a problem at all. However, I don't see any reason why legislating a minimum wage to be higher will make this happen. You can't legislate equitable pay. |
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03-23-13 12:06 AM
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I guess to update the thread a bit... President Obama wishes to raise the federal minimum wage from $7.25 to around $9.25 by 2014/15 (one of those years). Do you guys think that raising the minimum wage by about 2 dollars would help or hurt the economy? Do you guys think the minimum wage will be raised? (not asking for a specific dollar amount, but the action and passage to raise the wage) If minimum wage does get raised, do you think the younger generation will move toward getting a job instead of going to college if the wage increases? I guess to update the thread a bit... President Obama wishes to raise the federal minimum wage from $7.25 to around $9.25 by 2014/15 (one of those years). Do you guys think that raising the minimum wage by about 2 dollars would help or hurt the economy? Do you guys think the minimum wage will be raised? (not asking for a specific dollar amount, but the action and passage to raise the wage) If minimum wage does get raised, do you think the younger generation will move toward getting a job instead of going to college if the wage increases? |
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This debate caught my eye because me and some of my co workers were just talking about Obama trying to raise minimum wage from about 7 25 to about 9.25 or something in that range, they all said that raising it would pretty much be the same because it would increase all products at the grocery store and every other place. So what they plainly said is it would not matter if our wages were raised and that we would be paying the same taxes and buying milk for the same price as now except it would be higher in numbers. This debate caught my eye because me and some of my co workers were just talking about Obama trying to raise minimum wage from about 7 25 to about 9.25 or something in that range, they all said that raising it would pretty much be the same because it would increase all products at the grocery store and every other place. So what they plainly said is it would not matter if our wages were raised and that we would be paying the same taxes and buying milk for the same price as now except it would be higher in numbers. |
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I think the minimum wage in the UK should stay the same but I think the tax we pay on our earnings should be lowered because a lot of people can earn more on benefits than they can on a reasonably well paid job £25,000, they should not cut the benefits because some people genuinely need it for example people with server disabilities |
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