Consequences of eliminating the federal minimum wage rate

I'm Supposn · Jan 26, 2017

Consequencesof eliminating the federal minimum wage rate:

The federal minimum wage rate affects all other USA wage rates but its proportional effectis inversely related to job’s differing wage rates. USA’s working poor, (proportional to their earnings), are the greatest beneficiaries of the federal minimum wage rate.
The definite legally mandated and enforced minimum rate is the lowest denominator for all USA wage rates and their purchasing powers.

If the definite legal minimum is eliminated, it will be replaced with an indefinite market determined minimum rate.Unless there’s a scarcity of labor, the indefinite minimum rate will be of severely less (than the previous definite rate’s) purchasing power; (i.e. the minimum rate will “race to the bottom”).Because all rates are affected by the minimum, all USA wage rate purchasing powers’ will somewhat be reduced.

The indefinite minimum rate justifies increasing jobs but their wages would be of severely less purchasing power for lesser qualified workers to perform lesser demanding tasks.

Statistical unemployment rate will increase because the job pool for lesser qualified workers will generally more exceed the numbers of additional jobs created.
There will be small aggregate increase of GDP but the GDP per employee will decrease.
The reduced values of human labor slows automation adoptions and the realizations of their cost benefits.

Respectfully, Supposn

joG · Jan 26, 2017

I'm Supposn said:
Consequencesof eliminating the federal minimum wage rate:

The federal minimum wage rate affects all other USA wage rates but its proportional effectis inversely related to job’s differing wage rates. USA’s working poor, (proportional to their earnings), are the greatest beneficiaries of the federal minimum wage rate.
The definite legally mandated and enforced minimum rate is the lowest denominator for all USA wage rates and their purchasing powers.

If the definite legal minimum is eliminated, it will be replaced with an indefinite market determined minimum rate.Unless there’s a scarcity of labor, the indefinite minimum rate will be of severely less (than the previous definite rate’s) purchasing power; (i.e. the minimum rate will “race to the bottom”).Because all rates are affected by the minimum, all USA wage rate purchasing powers’ will somewhat be reduced.

The indefinite minimum rate justifies increasing jobs but their wages would be of severely less purchasing power for lesser qualified workers to perform lesser demanding tasks.

Statistical unemployment rate will increase because the job pool for lesser qualified workers will generally more exceed the numbers of additional jobs created.
There will be small aggregate increase of GDP but the GDP per employee will decrease.
The reduced values of human labor slows automation adoptions and the realizations of their cost benefits.

Respectfully, Supposn

So minimum wage should be $15, $25, $250?

I'm Supposn · Jan 26, 2017

joG said:
So minimum wage should be $15, $25, $250?

Jog, I’m unaware of any nation’s government having increased their legally mandated general minimum wage rate to the extent that it was of net detriment to their economy. Every increase of the federal minimum wage rate has been net beneficial to our economy.
I don’t doubt that a nation could radically and suddenly increased their minimum wage rate and thus shock their economy. I suppose that a minimum rate could be set sufficiently high to be of their nation’s net detriment. The USA has never done so and there’s been no creditable effort to do so.

February 1968 the federal wage rate was raised to $1.60 which when indexed to the CPI
https://data.bls.gov/cgi-bin/cpicalc.pl , 1968 = $1.60, 2016 = $11.03

1968’s $1.60 wasn’t particularly a great hourly rate then, and $11.03 isn’t particularly a great hourly rate now. Your question’s subjective rather than a question of fact. It’s my opinion that the $15 is reasonable if it thereafter retains its purchasing power. It's most important that the minimum rate retain its purchasing power.

I’d suggest pegging the rate to a current cost-price index number to be thereafter annually adjusted to stay abreast with that CPI, plus immediately after each of the first seven annual adjustments, the rate should be increased an addition $1.

Respectfully, Supposn

Lafayette · Jan 27, 2017

I'm Supposn said:
The federal minimum wage rate affects all other USA wage rates but its proportional effect is inversely related to job’s differing wage rates.

Not in the least. The Minimum Wage is presently $7.25 an hour (or 15080 per year, clearly a pittance).

The MR, if increased to $15 an hour ($31200) a year is way below the average wage presently of $54K. It will no doubt affect the average wage but minimally. At present, about 1.3 million workers earn the minimum wage out of a total of 123.6M - or barely 1.05%.

Raising the minimum wage will have an impact upon only 1% of the working population. If done over night, people will get fired. But if raised in 5 stages over 5 years (perhaps on a monthly or annual basis), it could be absorbed by the economy. It will push up the average wage, but that can only be a benefit to workers - and a boon to business since the additional wages will be a boost to the economy.

If done over five years, we will be able to see the impact upon Consumption and prices. The country at present is 3.2% of its previous high level of 63% in 2008 (before it tumbled - see here).

The hourly rise will not decrease unemployment, it is added purchasing power that motivates the economy to expand. So, the increased propensity to spend (due to increased earnings) could boost economic activity, which is only goodness. It will be an effective way of putting people back to work.

Of course, expect nothing of the kind to be done by a Replicant administration ...

James972 · Feb 16, 2017

Lafayette said:
Raising the minimum wage will have an impact upon only 1% of the working population. ..

at $15/hour it would include 42% of American workers thus destroying their interest in getting ahead by being worth more to an employer. This would cause depression. Liberalism is based on the inability to understand how capitalism works.

I'm Supposn · Feb 16, 2017

James972 said:
at $15/hour it would include 42% of American workers thus destroying their interest in getting ahead by being worth more to an employer. This would cause depression. Liberalism is based on the inability to understand how capitalism works.

James972, of course, When Trump’s income increased he lost all interest of further increasing it. Who knew?? James972 knew!!

With admiration and Respect, Supposn

James972 · Feb 16, 2017

I'm Supposn said:
When Trump’s income increased he lost all interest of further increasing it.

When Trump's income increased it was through business activity not through crippling liberal govt welfare. If 42% of Americans have a greatly increased wage through govt welfare how do you think they will plan on getting the next greatly increased wage??

James972 · Feb 16, 2017

Lafayette said:
The hourly rise will not decrease unemployment, it is added purchasing power that motivates the economy to expand.

actually the economy expanded from stone age to here thanks to the supply of new inventions, not printing money to hand out.

imagine one country focused on new inventions and the other on printing money to hand out. Which would succeed? Isn't thinking fun.

cuban smokes · Feb 16, 2017

people should work for free; we should all be slaves, that is what the GOP wants, slave labor, robots, feudalism, ...............

I'm Supposn · Feb 17, 2017

James972 said:
When Trump's income increased it was through business activity not through crippling liberal govt welfare. If 42% of Americans have a greatly increased wage through govt welfare how do you think they will plan on getting the next greatly increased wage??

James972, I thanked you for informing us that increased income dissuades people from striving for more; Refer to my 4:53 PM, 16Feb2017 post. Otherwise I never otherwise have known that. I wasn’t aware Trump for a long time has not sought profits. I suppose that’s the reason for his enterprises’ incidences of bankruptcy?

I learn from your 7:05 PM, 16Feb2017 post that inheritance as a business activity. Unless president Trump murdered his parents, I suppose he played a passive role in the business. (He doesn’t seem like a do-it-yourself guy and I don’t suppose he had his parents murdered).

Respectfully, Supposn

Napoleon · Feb 17, 2017

James972 said:
at $15/hour it would include 42% of American workers thus destroying their interest in getting ahead by being worth more to an employer. This would cause depression. Liberalism is based on the inability to understand how capitalism works.

We understand it perfectly. People were being paid in pennies and redeemable coupons for the very products they were producing before a mandatory minimum wage was established. We're never going back to that and it is the role of government to keep capitalism in check and ensure that a living wage is paid. It's the role of the market to attract people with greater skill sets through a competitive wage above the base salary, i.e. minimum wage. Demand for their labor doesn't go away - they just have to know what they're worth.

faithful_servant · Feb 17, 2017

joG said:
So minimum wage should be $15, $25, $250?

It should be $156,964/hr. so people only have to work one hour every three years and can dedicate the rest of their time to making the world a better place.

joG · Feb 17, 2017

faithful_servant said:
It should be $156,964/hr. so people only have to work one hour every three years and can dedicate the rest of their time to making the world a better place.

I'll drink to that.

faithful_servant · Feb 17, 2017

joG said:
I'll drink to that.

That'll be $3,987, please.

joG · Feb 17, 2017

faithful_servant said:
That'll be $3,987, please.

Now that is a steep drink!

I'm Supposn · Feb 17, 2017

Lafayette, the federal minimum wage rate’s proportional benefit to the job’s wage rate is inverse related to the difference between the two rates. (This is of no consequences regarding jobs for which there’s a labor shortage).

Those jobs paying lower rates proportionally benefit more and those jobs paying greater rates benefit less from the minimum rate. The minimum rate affects ALL USA WAGES.
As job rates incrementally approach the median rate, their proportional benefits are much less perceivable. Those earning the lowest fifth rates very significantly benefit due to the minimum rate. (20% is greater than 1%).

Respectfully Supposn

James972 · Feb 17, 2017

I'm Supposn said:
James972, I thanked you for informing us that increased income dissuades people from striving for more;

If the increased income comes from liberal welfare payments it does not dissuade the recipients from striving for more liberal welfare payments. What we actually want is them striving to acquire new skills so they can contribute to American rather than leech off it. Do you understand?

DA60 · Feb 18, 2017

I'm Supposn said:
Jog, I’m unaware of any nation’s government having increased their legally mandated general minimum wage rate to the extent that it was of net detriment to their economy. Every increase of the federal minimum wage rate has been net beneficial to our economy.
I don’t doubt that a nation could radically and suddenly increased their minimum wage rate and thus shock their economy. I suppose that a minimum rate could be set sufficiently high to be of their nation’s net detriment. The USA has never done so and there’s been no creditable effort to do so.

February 1968 the federal wage rate was raised to $1.60 which when indexed to the CPI
https://data.bls.gov/cgi-bin/cpicalc.pl , 1968 = $1.60, 2016 = $11.03

1968’s $1.60 wasn’t particularly a great hourly rate then, and $11.03 isn’t particularly a great hourly rate now. Your question’s subjective rather than a question of fact. It’s my opinion that the $15 is reasonable if it thereafter retains its purchasing power. It's most important that the minimum rate retain its purchasing power.

I’d suggest pegging the rate to a current cost-price index number to be thereafter annually adjusted to stay abreast with that CPI, plus immediately after each of the first seven annual adjustments, the rate should be increased an addition $1.

Respectfully, Supposn

Minimum wage advocates always seem to use the 1960's version - which was the high point.

I say compare it to the original version - 1933's $0.25/hour.

With inflation, it would today be roughly $4.75/hour.

Inflation Calculator | Find US Dollar's Value from 1913-2017

Plus, the original MW was abolished and was re-instated in 1938 at $0.25/hour. Which today only equals $4.31/hour.

By the terms of the original minimum wage, the currently one is FAR higher than the original and has more than kept pace with inflation.

https://en.wikipedia.org/wiki/Minimum_wage_in_the_United_States

Personally, I think the MW should equal the poverty line if one were employed at the MW full time.

The current poverty line for the lower 48 states is $12,060. That equals $6.03/hour.

https://aspe.hhs.gov/poverty-guidelines

But I can live with $7.25 and have it go up each year based on the inflation rate.

And please save the old 'well, that won't support a family of 5' nonsense. Any parents that are so pathetic as to be trying to support a family of 5 or more on MW should have their children taken from them by the state and deem them as unfit parents.

RetiredUSN · Feb 18, 2017

cuban smokes said:
people should work for free; we should all be slaves, that is what the GOP wants, slave labor, robots, feudalism, ...............

Where did you come up with this foolishness?

What do you do for work?

Are you dependent on low wages to get by on?

cuban smokes · Feb 18, 2017

RetiredUSN said:
Where did you come up with this foolishness?

What do you do for work?

Are you dependent on low wages to get by on?

I worked in the semiconductor industry for 11 years, medical device industry for 10 years, manufacturing & metrology, currently seeking a nice sunny beach for a longer stay & a damn good Margarita to accompany said beach

eace

who was that ***hat that recently faded from the tRump scene; he was gonna be on tRump's cab' but didn't work out ....... the Carl's Jr. guy

he stated he wanted to replace workers with robots; yes, I agree, foolishness ......

fmw · Feb 18, 2017

I'm Supposn said:
Consequencesof eliminating the federal minimum wage rate:

The federal minimum wage rate affects all other USA wage rates but its proportional effectis inversely related to job’s differing wage rates. USA’s working poor, (proportional to their earnings), are the greatest beneficiaries of the federal minimum wage rate.
The definite legally mandated and enforced minimum rate is the lowest denominator for all USA wage rates and their purchasing powers.

If the definite legal minimum is eliminated, it will be replaced with an indefinite market determined minimum rate.Unless there’s a scarcity of labor, the indefinite minimum rate will be of severely less (than the previous definite rate’s) purchasing power; (i.e. the minimum rate will “race to the bottom”).Because all rates are affected by the minimum, all USA wage rate purchasing powers’ will somewhat be reduced.

The indefinite minimum rate justifies increasing jobs but their wages would be of severely less purchasing power for lesser qualified workers to perform lesser demanding tasks.

Statistical unemployment rate will increase because the job pool for lesser qualified workers will generally more exceed the numbers of additional jobs created.
There will be small aggregate increase of GDP but the GDP per employee will decrease.
The reduced values of human labor slows automation adoptions and the realizations of their cost benefits.

Respectfully, Supposn

It is one way to look at it but it fails to include the effects of free market forces. I think the minimum wage defines what employers should pay people. Without it market forces would determine what that is. Wages could likely increase by eliminating the government definition.

I'm Supposn · Feb 18, 2017

DA60 said:
Minimum wage advocates always seem to use the 1960's version - which was the high point. ...

... Personally, I think the MW should equal the poverty line if one were employed at the MW full time.
The current poverty line for the lower 48 states is $12,060. That equals $6.03/hour.
https://aspe.hhs.gov/poverty-guidelines

But I can live with $7.25 and have it go up each year based on the inflation rate. ...

DA60, the federal minimum wage rate has never been detrimental to our nation’s economy. It has always been insufficient and would have been of greater benefit to USA’s economy if it’s purchasing power were greater. The minimum rate was insufficient when the rate’s purchasing power was at its 1968 $1.60/Hr. peak.

I advocate until the rate’s purchasing power’s equal to that of $2/Hr. in 1968, we annually increase the rate by the greater of 15% or no less than what’s necessary to retain the prior year’s purchasing power. When the rate’s purchasing power’s equal to that of $2/Hr. in 1968, we should thereafter annually adjust it to retain that purchasing power.

Respectfully, Supposn

I'm Supposn · Feb 18, 2017

fmw said:
It is one way to look at it but it fails to include the effects of free market forces. I think the minimum wage defines what employers should pay people. Without it market forces would determine what that is. Wages could likely increase by eliminating the government definition.

FMW, the federal minimum wage rates a minimum “safety net” within the USA. Is does not prevent states from determining greater minimum rates within their own jurisdictions and does not prevent employers from paying greater rates.

The federal minimum wage only intervenes with attempts to pay less than the minimum rate. It affects but does not otherwise determine wage rates. What’s the point of your post?

Respectfully, Supposn

I'm Supposn · Feb 18, 2017

Correction to prior post:

Originally Posted by DA60
Minimum wage advocates always seem to use the 1960's version - which was the high point. ...

... Personally, I think the MW should equal the poverty line if one were employed at the MW full time.
The current poverty line for the lower 48 states is $12,060. That equals $6.03/hour.
https://aspe.hhs.gov/poverty-guidelines

But I can live with $7.25 and have it go up each year based on the inflation rate. ...
DA60, the federal minimum wage rate has never been detrimental to our nation’s economy. It has always been insufficient and would have been of greater benefit to USA’s economy if it’s purchasing power were greater. The minimum rate was insufficient when the rate’s purchasing power was at its 1968 $1.60/Hr. peak.

I advocate until the rate’s purchasing power’s equal to that of $2.50. in 1968, we annually increase the rate by the greater of 15% or no less than what’s necessary to retain the prior year’s purchasing power. When the rate’s purchasing power’s equal to that of $2.50. in 1968, we should thereafter annually adjust it to retain that purchasing power.

Respectfully, Supposn

fmw · Feb 18, 2017

I'm Supposn said:
FMW, the federal minimum wage rates a minimum “safety net” within the USA. Is does not prevent states from determining greater minimum rates within their own jurisdictions and does not prevent employers from paying greater rates.

The federal minimum wage only intervenes with attempts to pay less than the minimum rate. It affects but does not otherwise determine wage rates. What’s the point of your post?

Respectfully, Supposn

Yes, I know. You missed the point.