5 facts about the minimum wage
As efforts to raise the federal minimum wage from $7.25 an hour have stalled repeatedly, several states and cities – from Los Angeles to New York state to Washington, D.C. – are acting on their own to raise minimum pay rates.
How exactly might perfectly competitive models of the labor market not hold up to scrutiny? What other models might do better at explaining the world around us? There are two telling models of imperfect labor market competition. First is the efficiency wage model, in which higher wages can boost the productivity of workers by boosting morale. In these cases, employers have a reason to raise wages because it can help the bottom line.
The second model is what’s known as a monopsony, in which employers have some degree of power in the marketplace because they have enough purchasing power over labor. In these cases, the level of employment in the overall economy is affected by the wages offered by employers rather than the other way around. So offering a higher wage might actually increase the pool of available labor.
So what are the implications of these two models? As two posts by Nobel Laureate Paul Krugman and one by the University of Massachusetts-Amherst’s Arindrajit Dube show, employers with some control over pay can actually raise wages a bit without seeing much of a decline in profits. As Krugman depicts in one of his posts, the trade-off between higher wages and higher profits is small and might even be zero. This result, if it actually holds up in the real world, would mean that firms can somewhat control wages and thus could raise them without seeing a major dent in profits. Krugman points to the recent experience of Walmart as an example reflecting the efficacy of these models.
But the implications of the models don’t stop here. Economics commentator Robert Waldmann points out that they might resolve a riddle in economics research posited by Harvard University economist George Borjas, who notes findings that indicate minimum wage increases don’t raise unemployment and that more immigration has a small effect on wages. Yet, as Waldmann points out, there’s only a contradiction between the two results Borjas point to if one believes the labor market is perfectly competitive. If one believes competition in the market is imperfect, then Krugman and Dube may be onto something.
Of course, we shouldn’t take these models too far. Employers may have some control over wages, but perfectly competitive models may also be good tools for explaining other trends in the labor market. Still, many of the labor market policies that are used to reduce inequality in the market, such as raising the minimum wage or increasing unionization, don’t seem to have the negative effects on the efficiency of firms and economic growth that the perfectly competitive models would have us believe. The implications could be significant.
I would’ve thought libertarians would agree more with a minimum wage rather than subsidized wages. If you want the government to pay part of wages, then you need to raise taxes, which libertarians oppose as a rule, and let them give the money out, which they also oppose. This seems like a fairly bad way to do it if one of you’re main arguments is that governments do things more inefficiently than corporations. Minimum wages seem kinda like a compromise between people who would rather have a basic income and those who would rather have no taxes to pay for all of this.
Yeah, bingo.
The problem is that right-wingers in general (this specific issue isn’t just a libertarian problem) keep wanting to have their cake and eat it too, where they cut both wages and welfare.
And it’s like, forget the moral concerns, the MATH simply doesn’t work that way. Either the companies pay for people to be able to live to work, or the government does. You can’t cut both and expect poor people to pull the remaining amount out of their ass.
Though ironically so far the rich people have technically been pulling the remaining amount out of their ass in the form of selling it to poor people as credit. But of course that just eventually resulted in a massive credit bubble, since again you can only cheat mathematics for so long.
We need to either have a living wage or government assistance. Pick one. Ironically even though I’m a lefty I’d rather have the living wage since I like on a personal level being able to trade my labor for resources, but I’ll take the assistance if the living wage job can’t be provided. Sadly, though, my attempts to produce money out of thin air keep stubbornly refusing to work.
(Source: ozymandias271)
A little bit more commenting on stuff I’ve been reading lately:
I absolutely do not get those people who oppose raising the minimum wage to be a living wage who do so via saying things like “Well, if McDonald’s paid the same as everything else, everyone would switch to working at McDonald’s!”
It’s like, dude, have you ever actually worked in retail? Because I can guarantee that anyone who actually tried making that switch would be running back screaming to their old career in about a week, tops. Even if retail was $20 while office work was still $10, I probably would still say “no thanks” to retail. It’s just not worth it. I’d rather scrimp by on office work than be rich while driving myself to the nuthouse in retail.
The number of jobs that are worse than retail are incredibly small, and they tend to involve things like risk of death or maiming.
Anonymous asked: Perhaps this is me being soft headed and romantic, but it seems to me that workers are not merely inputs on an economic optimization chart; that asking what they need and what they demand as human beings, and organizing society around that, is licit; and that it's hard for me to reconcile a description of an economic system that sees the needs of workers solely as that which is necessary for their productivity with the idea that said system is optimal for the workers.
I agree that we’re massively overlooking the ethics involved here. I just have to admit that ethics is not my strong point from the angle of being able to defend it properly, because ethics can be awfully bendy depending on what ideologies you’re dealing with, so it can end up in nothing but a shouting match of incompatible axioms. So I tend to try to approach things from as pure a pragmatic angle as possible to avoid that if I can.
And IMHO even if we look at this topic from that purely pragmatic standpoint of regarding labor as a resource, it still makes zero logical sense that we should consider it acceptable to have half-dead workers living in rotten conditions. Such a person would be in absolutely no condition to do the average present-day job properly; not even the vast majority minimum wage jobs.
Hell, don’t we already hear rampant complaints about how low-quality retail employees are? It’s like, well no kidding, if you pay people so little that they can’t achieve a quality level of presentation/health/education, then of course you’re not likely to be able get quality level work out of them. Even those people like me who actively wanted to do quality work often just didn’t have the personal resources available to do so because we were paid too little.
You get what you pay for, and labor is no exception. So we should be asking ourselves; even if we’re fine with the ethics of badly mistreated workers, are we as customers OK with the inevitable end result of our being offered substandard services and products from the hands of said badly mistreated workers?
Because lest we forget; that Gilded Age of workers living in wretched conditions often also produced wretched quality products that could harm or kill you as a customer. See things like The Jungle by Upton Sinclair, or how people used to market radium as jewelry decoration and a health tonic. There’s a reason it’s called the Gilded Age and not the Golden Age; because underneath that thin veneer of shiny for the people on top, everything else was rotten to the core.
Regulations on things like worker conditions and wages exist for a reason, and that reason is because we saw first-hand just how badly things were going without them.
my economic intuitions are weirdly different from mainstream Democrats’
they’re like “if a business can’t pay people enough to live on without those people getting money from the government, it can’t meet its basic operating expenses and it should close!”
and that seems… weirdly moralistic to me?
like… presumably the employees are better off employed than unemployed, that is why they are working, so the business closing doesn’t help them. And the customers get fewer options, which is worse for them. That seems pretty much bad for everyone involved. It feels like they’re treating Businesses Should Make A Profit as a terminal value?
I guess it makes sense if you’re counting welfare as an externality but… I really don’t think that makes sense? And like government subsidies are terrible but welfare is (ideally) available to everyone, not just to employees of a particular business
tbh I’d rather campaign for more welfare (or better yet a GBI) than a higher minimum wage; let people be able to choose freely whether they want a job or not, without fear of starvation or homelessness if they decide on the “not”, and then presumably wage issues will sort themselves out
It’s more of a pushback against the hypocrisy of conservatives constantly arguing in favor of the free market and against welfare, yet then turning around and whining that we should care about businesses having to close if we raise wages to be living wages.
Because if we actually followed the free market and opposed benefits like conservatives claim to want, then by logic of that ideology they should actually be perfectly fine with if a business closes because it can’t meet sustainable labor costs without government subsidies. Since welfare and other assistance for the working poor is effectively a government subsidy to businesses, as it’s literally the government underwriting their labor costs because the businesses can’t or won’t pay the full costs themselves.
As such, the argument that a business should close if it can’t meet its labor costs without government assistance isn’t moralistic, it’s just the pure logical end result of the tactic of following the logic of conservative arguments against leftist policies to discredit said logic.
Or to put it another way; if it’s moralistic, it’s via the Democrats following conservative morals better than the actual conservatives are.
P.S. Along those lines, there’s also possibly as a factor the fact that most leftists in the US are really rather moderate by global standards. So many Democrats actually probably like the conservative ideal of people being expected to work to support themselves; just that unlike the current crop of Republicans we realize we need to make that actually possible for all workers first before we can expect it.
(via taymonbeal)
jeysiec asked: One: ThingsYouCanSay on was wrong; the minimum wage IS/WAS designed to keep people out of poverty according to historical fact: jeysiec(.)tumblr(.)com/post/114228010262/ Two: It's been false for decades that minimum wage is only for entry-level people or that working hard actually gets anything other than measly 5 or 10 cent raises for people who started at minimum wage. Three: Being able to just barely afford to live without assistance is not "doing well". I mean, dur on that one?
out of poverty, yes. and that is what it is doing. the people “in poverty” in america are living quite handsomely in other countries. one of my friends who is “so poor his family needs benefits” is living comfortably with multiple TVs, a decent computer, and a rather spacious house.
here is how economics works, my friend. there is currently the low, middle, and upper class. the low class are making minimum wage (or living off of benefits which is stupid as fuck). middle class is making more, and upper class is making the most. now lets say you increase the minimum wage. all that would do is A make people lose jobs (because companies are suddenly required to spend more on workers) and B shift the entire spectrum of things upwards. the lower class is still the lower class, the price of goods goes up because companies still want to make a profit, you are making more but you are also paying more for every step in the process, because of the giant spiral raising the minimum wage would cause. a company has to pay more for their workers, so they raise goods. that company is an electric company, so all of the companies that get supplied by them are paying more on top of the more they have to pay for other goods and for their own workers, and the chain goes on and on and on.
“Two: It’s been false for decades that minimum wage is only for entry-level people”
give me one instance where a manager (NOT ENTRY LEVEL) gets only minimum wage. if you are a cashier you are entry level.
“ Three: Being able to just barely afford to live without assistance is not “doing well”. I mean, dur on that one?”
no shit it isn’t doing well. nobody is entitled to “do well” I live comfortably in the middle class. you want to know how my parents got there? they married at age 23/24 (respectively), had student loans and were both working two part time jobs each to make ends meet. sometimes ends didn’t meet and they had to take stuff off the grocery list and return them because they couldn’t afford it. they had to bounce checks multiple times to try to make ends meet. they worked hard for two or so years, until my dad got a promotion to a full time position at a radio station he worked at, and was able to quit his second part time job. because he was no longer at an entry level position, he was making a very very good $10, and was getting way more hours than before. my mom was still working her jobs, until my dad got a promotion to be a radio station news reporter, which allowed for my mom to quit her jobs (though she later got a part time job at a restaurant) and start making the run down apartment they lived in nicer. throughout this 7 years they saved and saved, and were able to buy their own house. After some more time and more days at work, my parents could afford kids. my dad was able to look for better work, and got the fundraising job he has had for the past 15 years.
nobody is entitled to “doing well” that is not something you get for free, you have to work hard and for quite a while and maybe your hours are bad at work and maybe some days you dont want to work but you have to to make ends meet and to prosper. nobody owes you shit, you have to make your life good yourself.
out of poverty, yes. and that is what it is doing.
Dude, you literally reblogged something that proves that’s false.
the people “in poverty” in america are living quite handsomely in other countries.
Which is irrelevant, since we don’t live in those other countries. Further, if you have to compare the richest country in the world to third-world countries in order to pretend our poor are well-off, isn’t that a giant red flag? Why don’t conservatives ever compare to other first world countries? Oh, right, because we’d lose for the most part. Tell me how our poor people’s living standards compare to the poor in the Netherlands, for instance.
one of my friends who is “so poor his family needs benefits” is living comfortably with multiple TVs, a decent computer, and a rather spacious house.
TVs cost $100 apiece. A decent computer costs $500. Neither means jack for not being poor, since they last for years, while most survival bills are ongoing costs. If I forewent a TV I’d only be able to afford a couple weeks of food. If I forewent the computer I’d be able to afford a month of rent. It’s completely irrelevant to not being poor.
Owning a house can cost the same as rent sometimes, but still means jack for being able to afford food, health insurance, clothing, transportation, higher education, etc.
Further, if they’re poor enough to need benefits yet can live in a house, they almost certainly live in a very very rural area, which can mean a lack of access to jobs and services compared to the city, as well as many other living differences. This differs wildly from the minimum needs of people living in a city or more urban areas. Hell, I live in a rural area within a generally urban area, and there’s no way in hell you could afford a house on anything less than middle class salary. Maybe not even that
here is how economics works, my friend. there is currently the low, middle, and upper class. the low class are making minimum wage (or living off of benefits which is stupid as fuck).
So, you don’t see the huge and obvious logic and mathematics problem with being against a living wage yet also being against benefits. How are people supposed to be able to afford to live to work, then? Shit money out their ass?
now lets say you increase the minimum wage. all that would do is A make people lose jobs
False. This has been proven false in literally every instance. By this logic almost every other first-world country in the world would have substantially higher unemployment than we do, yet they do not. Further, this logic does not hold true for states with higher minimum wages or municipalities with higher minimum wages either.
It doesn’t hold up mathematically either; obviously wages that have not even kept up with inflation cannot actually have any impact on employment. Particularly when companies have been making record profits, showing they obviously have more than enough cash to pay their workers with,
the price of goods goes up because companies still want to make a profit,
Again, obviously false. Again, obviously countries with much higher wages than ours do not actually have substantially higher prices. Not even when comparing like to like (McDonald’s branches in the US versus McDonald’s branches in, say Australia, for instance).
Again, also fails mathematically, since again obviously wages that haven’t even kept up with inflation (let alone productivity) cannot actually have any actual effect in prices.
give me one instance where a manager (NOT ENTRY LEVEL) gets only minimum wage. if you are a cashier you are entry level.
Nope, that is not “entry-level”. That is an actual job with little to no room for moving up, since there’s typically only 1 manager for every 20-50 employees. Some jobs do occasionally have a “Head Cashier”, but even that is still 1 head cashier for 5 or 10 lower cashiers.
no shit it isn’t doing well.
So why did you say, and I quote, “YOU DONT START OUT DOING WELL FOR YOURSELF YOU HAVE TO WORK HARD.”? You thus obviously think that means that having a living wage is “doing well”.
nobody is entitled to “do well”
One: What is your logic that someone working hard 40 hours a week doing useful work for society and making other people rich doesn’t deserve to “do well” themselves? Two: Then why do you expect people to “work hard” at all if it doesn’t guarantee “doing well”?
they married at age 23/24 (respectively), had student loans and were both working two part time jobs each to make ends meet. sometimes ends didn’t meet and they had to take stuff off the grocery list and return them because they couldn’t afford it.
So exactly the same as most poor people, then.
they had to bounce checks multiple times to try to make ends meet.
So exactly the same as most poor people, then.
they worked hard for two or so years, until my dad got a promotion to a full time position at a radio station he worked at,
So your dad got lucky, then, since most poor people work exactly as hard, often for longer, but don’t get lucky enough to score a promotion, since often there are no promotions available for them.
My mom worked her ass off for 15 years in the same retail job before she became too ill to work, was one of the most beloved workers at said retail place to the point where her customers still sing her praises whenever we bump into them, yet still made only a dollar over minimum wage by the time she retired. Please explain how that fits in with your narratives.
throughout this 7 years they saved and saved, and were able to buy their own house.
So they got lucky, then, in that they had employers that paid them enough to be able to afford the bills and still save up for that house.
Obviously people who don’t even make enough to afford to live cannot save up for anything.
nobody is entitled to “doing well” that is not something you get for free, you have to work hard and for quite a while and maybe your hours are bad at work and maybe some days you dont want to work but you have to to make ends meet and to prosper.
So like what the vast majority of poor people already do, but they didn’t get to be lucky like your dad.
Seriously, I get so tired of hearing this personal story bullshit from dumbass conservatives. Guess what? The vast majority of poor people actually worked just as hard as you did. The vast majority of poor people actually made personal sacrifices just as you did. The vast majority of poor people actually did literally everything you did. Literally the only difference was they weren’t lucky like you and didnt get to have employers that appreciated their work enough to give them better opportunities to grab for.
But you conservative jackasses don’t want to admit that hard fact, because then you’d have to crush your egos and admit you’re not as much of a special superior snowflake as you think you are.
P.S. And even that’s not a guarantee. I worked my ass off from poverty in years and years of retail, then years and years of white collar work, until I finally got lucky enough to have employers that appreciated my work enough to let me move up to a living wage job after all those years… and then I lost it six months later due to the financial crisis with there as a result being literally no replacement jobs available for me that were the same work and wages. Straight-A student, have no children, don’t do even legal drugs, never committed a crime, never bought any frivolous luxuries, etc. So please tell me what you think I did wrong compared to you to deserve still being poor; I look forward to the comedy.
nobody owes you shit, you have to make your life good yourself.
So you’re saying we have magic fairy dust control over what our employers pay us, and have magic fairy dust control over what jobs are available. We have magic fairy dust control over whether or not we get injured or sick. We have magic fairy dust control over whether we’re born into a place with jobs and good education available. Etc. etc.
Please tell me more about your fantasy world where someone has magic fairy dust control of every single variable in their life. so there is literally no case where someone can work hard yet get fucked over by factors they actually have no control over. (Even though that’s obviously what actually really happened for millions of people, including myself and my mother.)
As for your tags; I’m not an SJW, sweetums, and I’m also not the one who “got rekt” here.
I literally do not understand the “minimum wage wasn’t meant to be enough to live on!” sentiment even if it wasn’t factually false.
Then what is supposed to be the point, then? If you’re working full-time doing work society deems useful (which by definition you are, else nobody would have hired you to do it), then how can you seriously argue you don’t deserve at least enough money to live on afterwards without assistance? Even aside from that being borderline sociopathic, it also just utterly fails mathematics. Since math dictates that a job someone can’t afford to live on to work it is literally an unsustainable job. It also fails logic, in the sense that the same people who oppose a higher minimum wage also often oppose government assistance, even though, as shown above, the two sentiments are completely contradictory.
Nor does the logic that “only teenagers earn minimum wage” hold up, since that simply is not true. The majority of low-wage workers are older than their teens. Further, logic obviously dictates that teenagers can’t work morning or overnight shifts, and there’s only so many housewives and college students to go around. You’re invariably going to end up with adults in those positions, and my own experience working in retail bears this out to be the case.
And the idea that you’re supposed to “work hard and move up” also fails logic and reality. There tends to be one managerial position for every 20-50 employees, so obviously the notion of moving up is impossible for the majority of employees no matter how hard they work. Nor does working hard gain you enough raises to actually work up to a living wage; typically raises at the minimum wage level amount to a whopping 10 to 50 cents a year. Nor does working hard at retail give you any edge up to another career path, since despite the fact that retail teaches more skills than you might think, employers at other jobs often refuse to acknowledge that. Nor can you go to college, since you obviously cannot afford tuition when you already can’t even afford to live.
In short, the idea that the minimum wage should not be a living wage simply fails ethics, logic, and mathematics. People need to really stop saying it.
P.S. And that’s not even getting into how minimum wage hasn’t remotely kept up with inflation or productivity gains; the latter alone would actually push minimum wage to more than $20/hour. So you’re also arguing that minimum wage workers apparently don’t deserve to see a single dime of all the profit and wealth gains their hard work is generating. (Because indeed they are not; almost all of the wealth gains for decades have been going to the tiny top percentages of the population.) Which again fails ethics. Hell, it even fails conservative ethics, since the notion that someone should “be able to keep the fruits of their labor” is a common conservative anti-tax argument.
fun statistics for adults!
“when I was a kid, I had no help with college tuition, I was hardworking and paid it all myself”
-Annual tuition for Yale, 1970: $2,550
-Annual tuition for Yale, 2014: $45,800
-Minimum Wage, 1970: $1.45
-Minimum Wage, 2014: $7.25
-Daily hours at minimum wage needed to pay for tuition in 1970: 4.8
-Daily hours at minimum wage needed to pay for tuition in 2014: 17.3suck it grandpa
(via dcjosh)
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