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Thread: CBO Says Minimum-Wage Rise May Ease Poverty, Cost Jobs

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    Re: CBO Says Minimum-Wage Rise May Ease Poverty, Cost Jobs

    I don't know......with all the dumb stuff the Democrats have been doing over the past five years, while being told those are bad things to do and subsequently finding out that they ARE bad things to have done...it almost seems like the Democrats are doing these bad things on purpose!

    (nahhh...they wouldn't do THAT!...would they??)
    TANSTAAFL

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    Re: CBO Says Minimum-Wage Rise May Ease Poverty, Cost Jobs

    Quote Originally Posted by cpwill View Post
    It seems to me if the alternative is to make poor people structurally unemployable.... yes. Absolutely.
    Dependence on low-skill/low-wage labor is a characteristic of emerging markets, not a highly developed superpower.

    We should be seeking out more ways for our economy to leverage low-value workers.
    Wrong! WE should be seeking out ways to boost the skill sets of these types of workers, rather than incentivizing low value production which leads to skill stagnation.

    Making people structurally unemployable is destructive to them and the greater economy.
    See above.

    On the contrary, that the resources are being utilized there absent coercion indicates that it is likely to be the most optimal use of resources
    This is nonsense. Coercion is at its highest in low-skill/low-wage labor markets. Many of these people simply do not have a choice.

    and (as you seemingly admit) throwing low-wage workers out of jobs in order to marginally increase the wages of low-middle and middle income workers does not increase, but rather decreases the aggregate productive capacity of the nation.
    No need to put words in my mouth, as i made zero reference to anything you stated above. It's about creating more high skilled job opportunities by reallocating resources from the low to high end in terms of production value.

    because there is no such thing as competition?
    You continue to miss the point. Investment in fixed capital involves risks that supersede employing low-skill/low-wage labor. If you finance, you take on liabilities and if you fund expansion with retained earnings, you face risks of loss in capital/lower dividends.

    That's because Cash Pay as a salary works for those who are living in the black market, not those who are working in the above-ground economy.
    There are thousands of people who work for cash on the side who also reside in the above-ground economy. However, the overwhelming majority of this market does not have advanced degrees/certifications.

    Doctors aren't willing to risk going to jail for tax evasion - illegals know they are extremely unlikely to ever be pursued.
    People who have something to lose are not likely to risk it. Again, it is reflective in skill sets.

    The education and language skills of your average illegal immigrant is not that much better if it is better than your average low-income American.
    Perhaps. Work ethic with respect to opportunity is another factor.

    Hey, as long as you are upfront about the fact that the Minimum Wage Increase would hurt the businesses involved and the low-income people who previously worked for them, I'll admit, I'm left without much else to argue, except an a priori argument that doing so is bad economics, bad policy, and immoral.
    It is a matter of magnitude. Raising the minimum wage from $7.25 to $10.10 will have limited impact on the overall labor market and the prices of goods and services, and is the consensus among economists. On the other hand, companies that depend on low-skill/low-wage labor will be far more inclined to increase fixed capital investment. Case in point:



    On the contrary, those are precisely the kind of companies that we need more of
    You are crazy! We need more high-tech, capital intensive start-ups that depend on highly developed human capital. We cannot (and do not want to) compete with emerging economies using low-skilled labor. More companies that you advocate put us at a long term competitive disadvantage.

    unemployment among our poor, young, and low-education is at exceedingly high levels, and simply pricing them out of the job market because you find them distasteful is abusive.
    I don't find them distasteful, so please stop putting words in my mouth; it is a bad habit. These people need to be focusing on improving their skill sets so they can find long term, sustainable employment.

    It is precisely, in fact, the original argument in favor of the Minimum Wage.
    Then you have misunderstood my position in its entirety.
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

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    Re: CBO Says Minimum-Wage Rise May Ease Poverty, Cost Jobs

    Quote Originally Posted by cpwill View Post
    And government or organized labor is different because.......?

    The Hiroshima Prefectural Federation of Trade Unions is a made up concept.
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

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    Re: CBO Says Minimum-Wage Rise May Ease Poverty, Cost Jobs

    Quote Originally Posted by Kushinator View Post
    Dependence on low-skill/low-wage labor is a characteristic of emerging markets, not a highly developed superpower.
    You are mistaking the median worker for the low-income worker who is harmed by increases in the MW.

    Wrong! WE should be seeking out ways to boost the skill sets of these types of workers, rather than incentivizing low value production which leads to skill stagnation.
    Sure. When you figure out how to fix our broken family structure, failing education system, and urban culture that encourages anti-social behavior and disdains the idea of success through hard work and academic achievement as a game for suckers, you let me know. Until then, the "oh, well we will just turn all those 23 year old high school dropouts without the social capital or soft skill sets necessary for solid economic performance into program managers" is pie in the sky.

    See above.
    The the answer is the same. Since an increase in the minimum wage does not - in fact - increase the value of the labor of the individuals who earned it, you are simply making those workers structurally unemployable.

    This is nonsense. Coercion is at its highest in low-skill/low-wage labor markets. Many of these people simply do not have a choice.
    That is a strawman - no one was speaking as to coercion as far as labor choices, but rather as to resource allocation. Resources seek out their greatest return, that resources are already there in those positions indicates that government coercion to create a price floor will have no greater success than other government price-fixing measures have seen.

    No need to put words in my mouth, as i made zero reference to anything you stated above. It's about creating more high skilled job opportunities by reallocating resources from the low to high end in terms of production value.
    The resources you are reallocating are financial, not human. Which has been my point in this thread - that raising the minimum wage serves to take resources and reallocate them from the low-income worker to the low-middle and middle income worker. Robbing the poor to give to the middle income. When you agreed that those people would lose their jobs, I assumed you understood that to be a negative consequence. If you are now instead claiming that having their jobs destroyed is good for low-skill, low-income labor, then you need to defend that position.

    You continue to miss the point. Investment in fixed capital involves risks that supersede employing low-skill/low-wage labor. If you finance, you take on liabilities and if you fund expansion with retained earnings, you face risks of loss in capital/lower dividends.
    I don't doubt it - though investment in human capital involves risks you are including as well. Employees show up late, steal, prove to not be worth their pay, poison the workplace with bad attitudes, drive away customers with bad service, and quit at inopportune times.

    There are thousands of people who work for cash on the side who also reside in the above-ground economy. However, the overwhelming majority of this market does not have advanced degrees/certifications.
    I would be surprised if it was only thousands. Which in no way means that they are not dwarfed by the portion of the underground economy that works for unreported cash.

    People who have something to lose are not likely to risk it.
    You are correct that people are generally risk-averse.

    Perhaps. Work ethic with respect to opportunity is another factor.
    And is precisely one of those Social Capital Soft Skill sets that, given that they are absent from much of our lower income population, have to be developed in them through holding the kind of low-income jobs you find distasteful because the idea that a 16 year old kid isn't a computer programer is somehow wrong in a Superpower country You aren't going to be able to suddenly instill a strong work ethic in every MW worker simply by outlawing their jobs, meaning that you aren't going to be able to shift them up to the higher-value labor that you seem to envision them in.

    It is a matter of magnitude. Raising the minimum wage from $7.25 to $10.10 will have limited impact on the overall labor market and the prices of goods and services, and is the consensus among economists.
    The effects as measured against the entire economy would agreeably be slight. That is because the negative effects are concentrated among that small portion of us who are most economically vulnerable and least able to sustain them. It's like saying that you won't harm a football team that much by taking its' weakest members out and cutting off their legs. Sure, but if we want to claim that America is a place where you can rise up from any humble beginnings and be successful, (which I would value far above some kind of sniffing and claiming that low-value jobs have no place in a superpowers' economy), if we want to claim that that American Dream is still a reality, then cutting off opportunity for those at the bottom is one of the worst things we could do.

    On the other hand, companies that depend on low-skill/low-wage labor will be far more inclined to increase fixed capital investment. Case in point:

    I would agree and add:



    I just think that it's wrong. To the extent that public policy should help any sector of our populace to succeed, it should help the poor. Not pull the bottom rung of the economic ladder out of their reach.

    You are crazy! We need more high-tech, capital intensive start-ups that depend on highly developed human capital.
    That too. But we also need workers capable of filling those jobs - and we aren't going to get them unless they have the opportunity to develop both hard and soft skills at lower-paid employment.

    That's what low-paying jobs do. They provide a starting point. Even for Wal-Mart associates, the average wage isn't minimum wage, but most probably started there. I made minimum wage starting out, and then I made more, and then I made more, and hopefully in the future I will make more as I continue to add to my skill set and experience. But I was able to build myself up because I was able to start.

    We cannot (and do not want to) compete with emerging economies using low-skilled labor.
    "we" are not a monolithic entity.

    More companies that you advocate put us at a long term competitive disadvantage.
    On the contrary, shifting a significant section of our populace from social safety net dependents into full time workers would be beneficial for our economy and fiscal outlook.

    I don't find them distasteful, so please stop putting words in my mouth; it is a bad habit. These people need to be focusing on improving their skill sets so they can find long term, sustainable employment.
    wait. Do you really not understand how incredibly snobbish your points sound here? This isn't meant as an attack, if you aren't intending to write like that, I get that tone doesn't carry well through teh interwebz.

    Then you have misunderstood my position in its entirety.
    Again, if you are now going to claim that my sister in law, who is a 17 year old minority single mother high school dropout with tenuous command of the English language, a bad home environment, no picture of how a family is supposed to function, no history of watching a parent work full time regularly, and a self-centered worldview, is going to suddenly become a high-skill employee simply because you have raised the minimum wage, then you need to describe how that is going to work.

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    Re: CBO Says Minimum-Wage Rise May Ease Poverty, Cost Jobs

    Quote Originally Posted by Kushinator View Post
    Not accounting for illegal labor, only 3.6 million Americans were receiving less than or equal to the minimum wage in 2012. The question really becomes: do we want to support the ability to profit from low value production of goods and services?
    We should want to support it when the choice is between it happening here and happening overseas. Your argument almost comes off as the anti-gun nut who thinks that making firearms illegal will eliminate gun violence.

    Because it is a less than optimal use of resources, and as a result diminishes the productive capacity of the nation. Allowing companies to consistently profit from low wage labor leads to complacency with respect to fixed capital investment.
    America is still one of the most efficient working nations on an aggregate level. It also leads to increased foreign investment. This is most noticeable during the initial times when America went from a goods-oriented market to a services-oriented one.

    Of course. Increasing the minimum wage to the point where it would exceed the average wage is a ridiculous idea, and would harm most (if not all) businesses. Increasing the wage floor to reflect price differentials is not even comparable.
    Know what happens to the "average" when you raise the low end? It increases. Unskilled labor will always fall below the average in a market even remotely free. Good thing for that, because when that doesn't happen, a "brain drain" occurs when people expecting larger salaries to offset training/school prices and opportunity costs foregone for such will move to a place where their skill set is more appreciated. You greatly shift supply when you do what you want to do.

    My apologies, but i trying to provide an example of companies operating at such a tight margin, that they would have to let workers go because they only derive $10.60 from one hour of minimum wage labor. These are the kind of companies we can surely do without.
    Do you know the profit margins of the companies whose main source of cost is unskilled labor? They're among the lowest. Walmart's adjusted margin is considerably less than companies who use skilled and educated employees, such as energy companies. Saying that an almost 50% increase in labor not putting a heavy burden on these corporations is just naïve.

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    Re: CBO Says Minimum-Wage Rise May Ease Poverty, Cost Jobs

    Quote Originally Posted by cpwill View Post
    You are mistaking the median worker for the low-income worker who is harmed by increases in the MW.
    You continue these attempts to pigeon hole my position into accepting your claim that MW workers are harmed by increases in the wage floor. There certainly isn't much in the way of research to support this position.

    Sure. When you figure out how to fix our broken family structure, failing education system, and urban culture that encourages anti-social behavior and disdains the idea of success through hard work and academic achievement as a game for suckers, you let me know. Until then, the "oh, well we will just turn all those 23 year old high school dropouts without the social capital or soft skill sets necessary for solid economic performance into program managers" is pie in the sky.
    No need to combine a red herring with hyperbole. People from all demographic backgrounds and family structures look to increase their skill sets with the hope of finding sustainable future employment every single day. The idea that 23 year old drop outs will only find success from working min-wage jobs is nonsense. An abundance of low wage jobs will not turn people with limited skill sets into self-sufficient members of society (talk about pie in the sky).

    you are simply making those workers structurally unemployable.
    Implementing computer systems made millions of people structurally unemployable. But you know what, people adapted to the changing environment and learned how to use these productivity enhancing tools.

    And is precisely one of those Social Capital Soft Skill sets that, given that they are absent from much of our lower income population, have to be developed in them through holding the kind of low-income jobs you find distasteful because the idea that a 16 year old kid isn't a computer programer is somehow wrong in a Superpower country.
    Talk about a hyperbole-strawman and complete misrepresentation of my position!!! If it is youth employment you are so worried about, why have you yet to support a sub-19 minimum wage that is 50% less the standard minimum wage. This has been a success in Australia.

    You aren't going to be able to suddenly instill a strong work ethic in every MW worker simply by outlawing their jobs, meaning that you aren't going to be able to shift them up to the higher-value labor that you seem to envision them in.
    Missing the forest for the trees. I never mentioned a single word about instilling a strong work ethic in every MW worker by increasing wage floors. Please address my actual statements.

    That is a strawman - no one was speaking as to coercion as far as labor choices, but rather as to resource allocation.
    Human capital is a resource.

    Resources seek out their greatest return
    I see, but low skill workers are unable?

    that resources are already there in those positions indicates that government coercion to create a price floor will have no greater success than other government price-fixing measures have seen.
    It seems to be moving in the right direction.

    The resources you are reallocating are financial, not human. Which has been my point in this thread - that raising the minimum wage serves to take resources and reallocate them from the low-income worker to the low-middle and middle income worker. Robbing the poor to give to the middle income.
    You are describing a zero sum game while creating an incoherent scenario involving resource allocation toward workers and not firms. Firms allocate resources, not workers. This is a very simple concept that you seem incapable of grasping (choosing straws as a substitute). Reducing the demand for low-skill labor will reduce the supply, as evident in the last 35 years. A wage floor only serves to reduce future demand for low skill labor as firms transition, from more to less, labor intensive production.

    But guess what Will? So do advances in technology. Essentially, your counter argument is akin to the displaced factory worker who lost their job to automation, or the secretary who lost her job to advanced communication devices like mobile phones and automated answering services. We either embrace this change, or it will begin to take its toll on the nation as a whole.

    When you agreed that those people would lose their jobs, I assumed you understood that to be a negative consequence.
    Agreeing that moving from $7.25/hr to $25/hr would have negative consequences is not agreeing that gradual increases of the minimum wage would cause people to lose their jobs. On the contrary, i only stated it would reduce future demand for low skill labor, which is supported by the data. You're back to arguing against your own assumptions of my position. It won't work.

    If you are now instead claiming that having their jobs destroyed is good for low-skill, low-income labor, then you need to defend that position.
    Again, i am not making these pigeon holed claims. Try addressing my actual statements.

    I don't doubt it - though investment in human capital involves risks you are including as well. Employees show up late, steal, prove to not be worth their pay, poison the workplace with bad attitudes, drive away customers with bad service, and quit at inopportune times.
    And on the low end, they are fired without severance or extended benefits. When you sign a 3 year contract with a leasing company or allocate an entire years worth of retained earnings, it is a totally different ball game.

    I would be surprised if it was only thousands. Which in no way means that they are not dwarfed by the portion of the underground economy that works for unreported cash.
    I don't believe that reducing the minimum wage will reduce the number of cash workers.

    The effects as measured against the entire economy would agreeably be slight.
    Research points to negligible at best!

    That is because the negative effects are concentrated among that small portion of us who are most economically vulnerable and least able to sustain them.
    What has the research shown with respect to these workers?
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

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    Re: CBO Says Minimum-Wage Rise May Ease Poverty, Cost Jobs

    (continued)

    It's like saying that you won't harm a football team that much by taking its' weakest members out and cutting off their legs.
    Come on, now you are being absurd.

    Sure, but if we want to claim that America is a place where you can rise up from any humble beginnings and be successful, (which I would value far above some kind of sniffing and claiming that low-value jobs have no place in a superpowers' economy), if we want to claim that that American Dream is still a reality, then cutting off opportunity for those at the bottom is one of the worst things we could do.
    I didn't say they have no place, only that the emphasis should be placed on creating high-value jobs. A dynamic minimum wage along with public support for education/skill attainment and private sector commitment to provide additional OJT is the superior path.



    Who had to design, build, program, finance, sell, transport, install, and train people to service this piece of equipment? Certainly not a team of minimum wage workers!

    I just think that it's wrong. To the extent that public policy should help any sector of our populace to succeed, it should help the poor. Not pull the bottom rung of the economic ladder out of their reach.
    Providing an abundance of low-skill/low-wage labor does not help the poor. On the contrary, investment in human capital does.

    But we also need workers capable of filling those jobs - and we aren't going to get them unless they have the opportunity to develop both hard and soft skills at lower-paid employment.
    What looks better on a resume: 4 years of MW experience or a college degree? It's not even up to debate.

    That's what low-paying jobs do. They provide a starting point. Even for Wal-Mart associates, the average wage isn't minimum wage, but most probably started there.
    Maybe at Wal-Mart. But do you have anything to support the notion that most people who earn higher wages began at minimum wage?

    I made minimum wage starting out, and then I made more, and then I made more, and hopefully in the future I will make more as I continue to add to my skill set and experience. But I was able to build myself up because I was able to start.
    I never worked for minimum wage a day in my life, and continue to find high paying positions necessary to support my lifestyle.

    On the contrary, shifting a significant section of our populace from social safety net dependents into full time workers would be beneficial for our economy and fiscal outlook.


    The major safety net is disability insurance. I find it difficult to believe that lower wages are going to turn unwed mothers into full time workers.

    Again, if you are now going to claim that my sister in law, who is a 17 year old minority single mother high school dropout with tenuous command of the English language, a bad home environment, no picture of how a family is supposed to function, no history of watching a parent work full time regularly, and a self-centered worldview, is going to suddenly become a high-skill employee simply because you have raised the minimum wage, then you need to describe how that is going to work.
    I never stated that increasing the minimum wage will suddenly create high-skill employees. So please, stop attacking straw men and address my actual comments.

    Works both ways. If you believe lower minimum wages will turn her into a productive member of society, i have a great deal of public private land for sale at bargain prices. Minimum wage increases alone will not force people to upskill. We need cooperation among firms, government, and educators/trainers.
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

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    Re: CBO Says Minimum-Wage Rise May Ease Poverty, Cost Jobs

    Quote Originally Posted by Gipper View Post
    We should want to support it when the choice is between it happening here and happening overseas.
    At the expense of producing higher value products? Sorry, but overseas labor forces like China have an absolute advantage with respect to low-skill/low-wage labor. We need to focus on our advantages. Competing with emerging economies in low-value production is foolish.

    America is still one of the most efficient working nations on an aggregate level. It also leads to increased foreign investment. This is most noticeable during the initial times when America went from a goods-oriented market to a services-oriented one.
    Foreigners do not invest in the U.S. to utilize its low-skilled labor. They do so to cut down on transaction costs associated with manufacturing and transporting from abroad, or to tap into our highly skilled labor force.

    Know what happens to the "average" when you raise the low end? It increases.
    Should wages continue to increase as a reflection of productivity? How much have wages increased relative to productivity?



    Unskilled labor will always fall below the average in a market even remotely free.
    Thank you for pointing out the obvious. Maybe you can explain to cpwill just how ridiculous his $25/hr suggestion sounds.

    Do you know the profit margins of the companies whose main source of cost is unskilled labor? They're among the lowest.
    Source?

    Walmart's adjusted margin is considerably less than companies who use skilled and educated employees, such as energy companies.
    Walmart is a price competative retailer! Comparing them to an energy oligolopy company is not as hilarious as it is ridiculous!

    Saying that an almost 50% increase in labor not putting a heavy burden on these corporations is just naïve.
    Given the record amounts of profits, i don't think the burden is as heavy as you make it out to be.

    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

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    Re: CBO Says Minimum-Wage Rise May Ease Poverty, Cost Jobs

    It is a curious result of government "fairness" meddling. What it does is create wealth distribution from one group of low wage earners to another group of low wage earners. The recipients make a little more and are happier. The ones who lose their jobs face a personal crisis. Let's give congress longer vacations. That should provide a reduction in unintended consequences.

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    Re: CBO Says Minimum-Wage Rise May Ease Poverty, Cost Jobs

    Quote Originally Posted by DA60 View Post
    CBO Says Minimum-Wage Rise May Ease Poverty, Cost Jobs

    'Increasing the U.S. minimum wage may lift some workers out of poverty while leading to as many as 1 million job losses, according to a report from the Congressional Budget Office.

    The report was seized on by House Speaker John Boehner, an Ohio Republican who opposes President Barack Obama’s call to increase the minimum wage to $10.10. The federal minimum wage is currently $7.25 an hour.

    ...A change in employment probably would range from a “very slight reduction” to a decrease of 1 million jobs, CBO said. Some workers would lose their jobs as companies look to offset the change by reducing payrolls, according to the report.'



    CBO Says Minimum-Wage Rise May Ease Poverty, Cost Jobs - Bloomberg
    Raising the minimum wage certainly wont ease poverty (it will actually make it worse) but it will certainly kill jobs.

    Delusional progressives like Obama who have never worked a day in their lives have no idea that businesses operate on a budget.

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