Page 1 of 47 12311 ... LastLast
Results 1 to 10 of 465
Like Tree164Likes

Thread: The Minimum Wage Fallacy

  1. #1
    User
    Join Date
    Apr 2012
    Location
    Massachusetts
    Last Seen
    07-12-12 @ 03:51 PM
    Gender
    Lean
    Libertarian
    Posts
    14
    Likes Received
    5 times
    Likes Given
    19

    The Minimum Wage Fallacy

    The idea of a minimum wage is-despite being good intentioned- deeply flawed. Wage control, in the long run, actually has the opposite effect of its original intention, and that is, to raise the standard of living for the average worker. Although this may seem ludicrous, let me explain.

    Before a minimum wage, employers are able to hire and pay as they see fit. A typical restaurant can employ as many bus boys, cooks, waiters and waitresses, hosts, or whatever else they would like, as needed. Employees with higher sets of skills are paid more handsomely, albeit nominal for their position, and other employees, with less important jobs, are paid less. Those workers who are paid less typically are people with less skill, less education, or less experience. Now, with a minimum wage, the employer must cut back and consolidate in order to still run their business at an operable level; the lower-skilled persons are fired, and only the workers with higher skill levels are kept, but now those workers must take on the responsibilities that are now given them from having those who had them before being fired.

    Since the firm has free reign over who they hire and who they fire, it can be inferred that the firm will only keep the high-skilled workers. Those with less education, less skill, and/or less experience are now without a job, or money. On top of this, the workers that do remain in hire now must take on more work, thus lowering the actual working conditions of the job. Those who were fired (or never even hired) will not have the means to get better education, obtain skills in the workplace, or in general, add to any experience they might have. Ironically, the people who benefit from wage control (if anyone at all) are the workers who would have been paid that wage anyways.

    This is just a micro-level analysis, though. On a macro-level, wage control gives the incentive for firms to off-shore their production to countries with lower wage demands than countries with high wage demands.

    Thoughts? Errors in my analysis? Agree or Disagree?
    Last edited by kylestephens123; 04-26-12 at 01:50 AM.

  2. #2
    Guru
    nonpareil's Avatar
    Join Date
    Dec 2009
    Last Seen
    11-15-14 @ 10:24 PM
    Lean
    Undisclosed
    Posts
    3,107
    Likes Received
    742 times
    Likes Given
    292

    Re: The Minimum Wage Fallacy

    Quote Originally Posted by kylestephens123 View Post
    The idea of a minimum wage is-despite being good intentioned- deeply flawed. Wage control, in the long run, actually has the opposite effect of its original intention, and that is, to raise the standard of living for the average worker. Although this may seem ludicrous, let me explain.

    Before a minimum wage, employers are able to hire and pay as they see fit. A typical restaurant can employ as many bus boys, cooks, waiters and waitresses, hosts, or whatever else they would like, as needed. Employees with higher sets of skills are paid more handsomely, albeit nominal for their position, and other employees, with less important jobs, are paid less. Those workers who are paid less typically are people with less skill, less education, or less experience. Now, with a minimum wage, the employer must cut back and consolidate in order to still run their business at an operable level; the lower-skilled persons are fired, and only the workers with higher skill levels are kept, but now those workers must take on the responsibilities that are now given them from having those who had them before being fired.

    Since the firm has free reign over who they hire and who they fire, it can be inferred that the firm will only keep the high-skilled workers. Those with less education, less skill, and/or less experience are now without a job, or money. On top of this, the workers that do remain in hire now must take on more work, thus lowering the actual working conditions of the job. Those who were fired (or never even hired) will not have the means to get better education, obtain skills in the workplace, or in general, add to any experience they might have. Ironically, the people who benefit from wage control (if anyone at all) are the workers who would have been paid that wage anyways.

    This is just a micro-level analysis, though. On a macro-level, wage control gives the incentive for firms to off-shore their production to countries with lower wage demands than countries with high wage demands.

    Thoughts? Errors in my analysis? Agree or Disagree?

    If your economics work correctly, and jobs such as waitressing and sale clerk have different skill sets and one job is harder than the other (waitressing is harder than being a sale clerk say), if they are paid the same thing, then most people will apply to be a sale clerk (they get the same wage for less work). The number of qualified people applying for waitressing falls, and pays will have to rise to attract qualified people to that job.

    Businesses can only fire people if they are overstaffed. Then according to economic theory, they are inefficient businesses anyway, irregardless of wages, someone else with better business sense should take over and run a leaner operation to maximise their profits.

    Anyone can make arguements, what counts is the evidence. Do you have evidence that wage control leads to lower standard of living? Try comparing countries with wage control and no wage control and their average standard of living. There could be reverse causation or no causation at all, but if you can't even establish a positive correlation between wage control and lower standard of living, then there's nothing wrong with your argument.
    Last edited by nonpareil; 04-26-12 at 02:15 AM.
    Quote Originally Posted by Free_Radical View Post

    And I wasn't making an appeal to authority, I was making an appeal to the philosophical body of work of the founders, the worth and content of which should be well-known to anyone with a cursory understanding of basic history and philosophy.

    Brian

  3. #3
    Irukandji
    mbig's Avatar
    Join Date
    May 2009
    Last Seen
    Yesterday @ 10:59 PM
    Gender
    Lean
    Other
    Posts
    7,773
    Likes Received
    3656 times
    Likes Given
    4805

    Re: The Minimum Wage Fallacy

    Another Minimum wage string.
    OK, sure.

    We've lost all/or certainly most of the jobs we can lose that are wage sensitive. Raising Minimum wage won't lose many more. We make little now.
    We've even lost service phone jobs to India et al. And remote engineering too.
    They can't move the restaurant etc, jobs offshore, so why not give a decent wage?

    Wages are also depressed by 11 million illegals who are happy to work for half of it.
    So, workers are not only squeezed by $1 an hour overseas, but $3/$4 here.. illegally. A False oversupply.
    I'd be OK with no minimum wage if we had a REAL market for domestic citizens/legal workers. We don't.
    The Fallacy in your post is that we do.

    Send a few million illegals back and wages go up across the board.
    Let's see what OUR sons and daughters want to bus tables and wash dishes (or day-work carpentry) when there's no false labor supply.
    My niece wouldn't wash dishes for $15 an hour even before she got her job. You?

    Lets's put our seniors who need to supplement their SS back to work in many other jobs and make the hiring of illegals.. illegal with Stiff penalties.
    Like, 5k first offense.
    10K, second offense.
    Jail, Third offense.
    Let's see hat the Real Market minimum wage is for low-skilled jobs and we probably won't need to legislate one.
    Last edited by mbig; 04-26-12 at 02:41 AM.
    So far from being persecuted, the Arabs have crowded into the country and multiplied till their population
    has increased more than even all world Jewry could lift up the Jewish population.
    - Winston Churchill 1939

  4. #4
    Villiage Idiot
    imagep's Avatar
    Join Date
    May 2010
    Location
    Upstate SC
    Last Seen
    Yesterday @ 09:39 PM
    Gender
    Lean
    Independent
    Posts
    17,260
    Likes Received
    6706 times
    Likes Given
    20884

    Re: The Minimum Wage Fallacy

    I have never actually met a business manager who said "I would hire more people if I could pay them less than minimum wage". I start out new unskilled hires at considerably more than minimum wage. The only people I know that make minimum wage work in fast food or retail as part time workers, most are teenagers living with their parents. I believe minimum wage to be a moot point.

  5. #5
    pirate lover
    liblady's Avatar
    Join Date
    Aug 2009
    Location
    Florida
    Last Seen
    09-11-13 @ 02:00 PM
    Gender
    Lean
    Liberal
    Posts
    16,059
    Likes Received
    5018 times
    Likes Given
    3271
    Blog Entries
    1

    Re: The Minimum Wage Fallacy

    Quote Originally Posted by kylestephens123 View Post
    The idea of a minimum wage is-despite being good intentioned- deeply flawed. Wage control, in the long run, actually has the opposite effect of its original intention, and that is, to raise the standard of living for the average worker. Although this may seem ludicrous, let me explain.

    Before a minimum wage, employers are able to hire and pay as they see fit. A typical restaurant can employ as many bus boys, cooks, waiters and waitresses, hosts, or whatever else they would like, as needed. Employees with higher sets of skills are paid more handsomely, albeit nominal for their position, and other employees, with less important jobs, are paid less. Those workers who are paid less typically are people with less skill, less education, or less experience. Now, with a minimum wage, the employer must cut back and consolidate in order to still run their business at an operable level; the lower-skilled persons are fired, and only the workers with higher skill levels are kept, but now those workers must take on the responsibilities that are now given them from having those who had them before being fired.

    Since the firm has free reign over who they hire and who they fire, it can be inferred that the firm will only keep the high-skilled workers. Those with less education, less skill, and/or less experience are now without a job, or money. On top of this, the workers that do remain in hire now must take on more work, thus lowering the actual working conditions of the job. Those who were fired (or never even hired) will not have the means to get better education, obtain skills in the workplace, or in general, add to any experience they might have. Ironically, the people who benefit from wage control (if anyone at all) are the workers who would have been paid that wage anyways.

    This is just a micro-level analysis, though. On a macro-level, wage control gives the incentive for firms to off-shore their production to countries with lower wage demands than countries with high wage demands.

    Thoughts? Errors in my analysis? Agree or Disagree?
    on the whole i think you are wrong. no business owner hires more people than he needs, or he wouldn't be in business long. common sense tells you that.

    Originally Posted by johnny_rebson:

    These are the same liberals who forgot how Iraq attacked us on 9/11.


  6. #6
    User
    Join Date
    Apr 2012
    Location
    Massachusetts
    Last Seen
    07-12-12 @ 03:51 PM
    Gender
    Lean
    Libertarian
    Posts
    14
    Likes Received
    5 times
    Likes Given
    19

    Re: The Minimum Wage Fallacy

    I'm saying we should get rid of the minimum wage in order to (hopefully) have some of those jobs that went foreign return, because our economy as it is is unsustainable. We need imports just as much as we should rely on exports, and the only reason are economy has remained the way it has is because of the fact that the U.S. dollar is the World Reserve Currency, that being the currency that all countries trade in. It gives our money an edge over other currencies.

    And the illegal immigrant argument is a misguided one. There is substantial evidence that the economy expands as immigration does, and typically, the skill set of immigrants compliments the skill set of Americans-immigrants have either really low or really high skill sets, but most Americans have an average skill set, like a bell curve. Seeing as i do not have the time to bring up any research work are academia to support this, I'll link this video and hope that it spurs you to investigate for yourself. Top Three Myths about Immigration - YouTube

  7. #7
    Advisor
    Join Date
    Jul 2009
    Last Seen
    12-10-14 @ 02:49 PM
    Lean
    Undisclosed
    Posts
    396
    Likes Received
    70 times
    Likes Given
    6

    Re: The Minimum Wage Fallacy

    Excerpts from the first message of the tread ďThe consequences of repealing minimum wage ratesĒ,
    posted on the economics board at 11:55 AM, March 27, 2012:

    If there were no minimum wage many additional lower wage jobs would be created.
    The vast majority of those newly induced jobs would be what we now describe as sub-minimal wage paying jobs that do not justify the current $7.25/Hr. federal minimum wage rate.............................................. ... There are many job tasks that do not justify the minimum rate but they now exist because their performance is necessary to our public or private enterprises. Those jobs will continue to exist but their wage levels will plunge down to sub-minimum rates.

    Sub-minimum jobs will be the vast majority of additional jobs created and (because many of those qualified to perform sub-minimum tasks were previously not qualified for employment at minimum wage rates), weíll have a pool of eligible labor that will far exceed the number of those additional jobs.

    The affect of those extremely poor paying jobs will ripple throughout our entire labor market. All labor compensation will be somewhat affected but the general extent of the effect upon a taskís wage rate will be inversely related to the difference between the purchasing power of the eliminated minimum wage rate and the jobís rate; (i.e. the more youíre earning, the less youíre hurting. Thatís the meaning of minimum wage rateís inverse affect upon all jobsí rates).

    Lower wage earners will all then be paid in wages of extremely poor purchasing power. Prior to the elimination of the minimum wage rate, many of those now earning the lesser purchasing powered wages will have been unemployed or not worked steadily but they will be joined by those who already had been the working poor and some who were previously getting by slightly better.

    Thereíll be net increased needs for public assistance and our states canít now handle the present needs.
    Thatís a scenario of increased national poverty.
    I Ďm a proponent of an annually cost of living adjusted minimum wage rate similar to the annually COLAíd Social Security benefits.

    Respectfully, Supposn

  8. #8
    Advisor
    Join Date
    Jul 2009
    Last Seen
    12-10-14 @ 02:49 PM
    Lean
    Undisclosed
    Posts
    396
    Likes Received
    70 times
    Likes Given
    6

    Re: The Minimum Wage Fallacy

    Kyle stephens123, I suppose itís conceivable that an excessive minimum wage rate could be detrimental to a nationís economy.
    Iím unaware of such an effect upon any nationís economy during any historical period.

    Respectfully, Supposn

  9. #9
    Sage
    Arbo's Avatar
    Join Date
    Dec 2011
    Location
    Colorado
    Last Seen
    11-25-14 @ 03:03 AM
    Gender
    Lean
    Independent
    Posts
    10,280
    Likes Received
    2704 times
    Likes Given
    1781
    Blog Entries
    2

    Re: The Minimum Wage Fallacy

    The biggest fallacy related to minimum wage is that people stick at that level. No, it is generally a start, and people move up. Most minimum wage is for those that start in the work force.

    And yes, if you push it up, it devalues the work done.
    "nah i think the way cons want to turn this into a political issue is funny though" - Philly Boss

  10. #10
    Keynesian Libertarian
    Jeezy's Avatar
    Join Date
    May 2011
    Last Seen
    04-14-13 @ 01:48 PM
    Gender
    Lean
    Independent
    Posts
    1,326
    Likes Received
    1166 times
    Likes Given
    1141

    Re: The Minimum Wage Fallacy

    If I had a nickel for every time this topic has been rehashed...
    SWAGSWAGSWAGSWAGSWAGSWAGSWAGSWAG
    Quote Originally Posted by Josie
    Thanks for your awesomeness, Jeezy.

Page 1 of 47 12311 ... LastLast

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •