Minimum Wage debate - USA

[fathertime]

Here in LA, you can get a fairly nice home for $400,000. During the real estate meltdown, there were whole city blocks out on the way to Palm Springs, with 20 houses, that you could pick up for under a million.

I don't know what jone is talking about here.  I saw nothing of the sort, unless he is talking about the Salton Sea area, but that is not on the route from LA to Palm Springs.  Entire blocks of houses (New?) average price below 50K, between LA and Palm Springs?   Never saw those, but I'd be curious if he can provide the city or an example...it certainly doesn't sound right...not along the route he mentioned...but lets see if there is further clarification.


Fathertime!   

[vwrw]

Although the increasing gap between rich and poor seems alarming to me,  I do not think an increase in the minimum wage imposed by the government will do much good. The consequences of such a step is increased prices or/ and increased unemployment.


If you increase wages of the entree level employees (let's assume from 8$ to 15$), then the middle level employees who currently earns 15$ will ask for 7$ raise in their wages or they will be disgruntle, and so on. It would cause a chain reaction. Some business will have to lay off some employees to keep the wage cost under control. Many business will increase prices for their goods and services to offset the increase in wages and after a couple of years of turbulence, 15$ will be able to purchase no more stuff than 8$ purchase now.

[lordtiberius]

Although the increasing gap between rich and poor seems alarming to me,  I do not think an increase in the minimum wage imposed by the government will do much good. The consequences of such a step is increased prices or/ and increased unemployment.


If you increase wages of the entree level employees (let's assume from 8$ to 15$), then the middle level employees who currently earns 15$ will ask for 7$ raise in their wages or they will be disgruntle, and so on. It would cause a chain reaction. Some business will have to lay off some employees to keep the wage cost under control. Many business will increase prices for their goods and services to offset the increase in wages and after a couple of years of turbulence, 15$ will be able to purchase no more stuff than 8$ purchase now.

This is a wise woman and a lady.  I wish more of our members would heed her well chosen words.

[Shadow]

Although the increasing gap between rich and poor seems alarming to me,  I do not think an increase in the minimum wage imposed by the government will do much good. The consequences of such a step is increased prices or/ and increased unemployment.


If you increase wages of the entree level employees (let's assume from 8$ to 15$), then the middle level employees who currently earns 15$ will ask for 7$ raise in their wages or they will be disgruntle, and so on. It would cause a chain reaction. Some business will have to lay off some employees to keep the wage cost under control. Many business will increase prices for their goods and services to offset the increase in wages and after a couple of years of turbulence, 15$ will be able to purchase no more stuff than 8$ purchase now.

Actually that is incorrect. A minimum wage should give a family income that is a little above the survival line.
If the minimum wage is below the survival line, it has to be increased in any case.
People who earn the new minimum wage will not ask for a raise, as their salary is not bound ti minimum wage level but to the level of their job. Social exploitation is a huge issue that should have been banned 100 years ago.

Having said that, a one-time raise from $8 to $15 is something I do not see as beneficial.
Better set an objective level (120% of survival?) and raise the level a little every year until it is on this level. After that keep it in line with inflation.

[AC]

Although the increasing gap between rich and poor seems alarming to me,  I do not think an increase in the minimum wage imposed by the government will do much good. The consequences of such a step is increased prices or/ and increased unemployment.


If you increase wages of the entree level employees (let's assume from 8$ to 15$), then the middle level employees who currently earns 15$ will ask for 7$ raise in their wages or they will be disgruntle, and so on. It would cause a chain reaction. Some business will have to lay off some employees to keep the wage cost under control. Many business will increase prices for their goods and services to offset the increase in wages and after a couple of years of turbulence, 15$ will be able to purchase no more stuff than 8$ purchase now.

  

[lordtiberius]

Actually that is incorrect. A minimum wage should give a family income that is a little above the survival line.
If the minimum wage is below the survival line, it has to be increased in any case.
People who earn the new minimum wage will not ask for a raise, as their salary is not bound ti minimum wage level but to the level of their job. Social exploitation is a huge issue that should have been banned 100 years ago.

Having said that, a one-time raise from $8 to $15 is something I do not see as beneficial.
Better set an objective level (120% of survival?) and raise the level a little every year until it is on this level. After that keep it in line with inflation.

A minimum wage is a fraud.  It supposed to help low skill workers but what it does is price out small businesses in favor of big businesses.  Nice try.

[Shadow]

A minimum wage is a fraud.  It supposed to help low skill workers but what it does is price out small businesses in favor of big businesses.  Nice try.

The fraud is people not being willing to allow their workers life.

[lordtiberius]

Facts are stubborn things.  May you reap what you sow.

I stand with the lady.

[fathertime]

Having said that, a one-time raise from $8 to $15 is something I do not see as beneficial.
Better set an objective level (120% of survival?) and raise the level a little every year until it is on this level. After that keep it in line with inflation.

This seems reasonable enough, the minimum wage coupled with other social welfare programs is striking a reasonable balance.  With these programs in place, 15 an hour is not needed.  I can see 10 or 11 an hour in the next 5 years, all things remaining somewhat equal.


Fathertime!   

[AC]

People who earn the new minimum wage will not ask for a raise, as their salary is not bound to minimum wage level but to the level of their job. Social exploitation is a huge issue that should have been banned 100 years ago.

You mean like in Putin's Russia?  I find it ironic that a man who claims to be concerned about living standards in the USA wishes to keep E. Ukraine and the rest of Ukraine enslaved to a 19th Century dictator as opposed to the self-determination and higher living standards of being a member of the EU.

Even more ironic that a man who seems to be an atheist would embrace a mafia brute thug who has a strange relationship with Orthodox manifest destiny.   

[Shadow]

You mean like in Putin's Russia?  I find it ironic that a man who claims to be concerned about living standards in the USA wishes to keep E. Ukraine and the rest of Ukraine enslaved to a 19th Century dictator as opposed to the self-determination and higher living standards of being a member of the EU.

Even more ironic that a man who seems to be an atheist would embrace a mafia brute thug who has a strange relationship with Orthodox manifest destiny.   

It seems you know little of my views.
I am all for self-determination of Ukraine, without any meddling from any party. That includes EU and US as well as Russia and Turkey.
As for EU membership, they are far away as the EU does not need cheap labour at this  time.
Further more you know well enough that for any mafia member a religious affiliation is the best way to hide money and keep respect.

[AC]

It seems you know little of my views.
I am all for self-determination of Ukraine, without any meddling from any party. That includes EU and US as well as Russia and Turkey.
As for EU membership, they are far away as the EU does not need cheap labour at this  time.
Further more you know well enough that for any mafia member a religious affiliation is the best way to hide money and keep respect.

 

[Turboguy]

A minimum wage is a fraud.  It supposed to help low skill workers but what it does is price out small businesses in favor of big businesses.  Nice try.

That and it would also tend to make us less competitive in the world market place.   I am not sure people are really better off anyway.


First off minimum wage really should be determined more at the state level with the federal guidelines matching the lowest of the state numbers.  What I mean by that is that in places with a low cost of living something in the $ 7-10.00 per hour is a livable wage.  In NYC it is not and even McDonalds would not attract workers paying minimum wage.  The same applies to places like Boston, San Francisco, etc.  My point is that minimum wage is not a universal thing.   Wages need to be set more by the law of supply and demand than by laws.  If you make a healthy economy by allowing companies to compete and grow then the demand for workers will cause a wage increase.  Companies paying too little will not be able to hire and retain workers.  Minimum wage laws are a band aid and the solution is to fix the underlying illness.


I got to do a lot of relaxing over my holiday and spent some time thinking about how an increase in the minimum wage to the $ 15.00 per hour would affect my business and how I would react to neutralize it. 


One of the problems that would be particular to my business only is the way I have my pay schedule set up.  By that I mean we do more than an hourly rate.   Exactly what we do is usually a new hire for production is hired at $ 10.00 per hour.  After 90 days they are eligible for a production bonus which nearly every week will add about 3 bucks an hour to their pay and at the end of the year we have profit sharing which requires a certain profit before it does get paid but also increases as our profit increases.  This year we payed out about 60 grand, I believe, split among 10-12 people.   After a few years their hourly pay may go up.   So right now I have about 5 people making 10 bucks an hour, one making 13, one making 14 or 15 and one making 17 or 18, (plus bonuses of course)   Now if the minimum wage went up to $ 15.00 that would affect all but one or two however if the guys currently making  10 bucks an hour are moved up to 15, those making 13 bucks an hour are not going to be happy moving up to 15 are they?   No, I would have to move them up to maybe 18 and the one making 17 or 18 would have to go up to $ 22.00 or so, right?   So then it isn't just affecting the guys struggling to feed their family.  It will effect all employees and many other companies would be in the same boat. 


So my first thought was that my payroll would go from about a half million a year to about 800,000 a year.  So, maybe I could increase prices enough to cover all of that.  But then my employee taxes would also go up since they are making more money so that adds another 50 grand or so to my expenses.  It would seem logical to me that if my costs are going up by $ 350,000 a year and to come out even I would have to increase prices about 20% or more assuming that the higher prices did not reduce sales.   But then assuming other companies would be in the same boat and that they may also have to increase prices by 20% or so then it seems logical to me that my material costs could well go up by 20% just as easily.  Now if they go up by 20% then I need to add another 20-30% to cover my higher costs there so we are now looking at having to increase prices maybe 50-60% just to stay even.  Since most of my competitors are in the USA they would also need to raise prices by 50-60% to cover this increase so I would remain competitive and it would not be a big deal, right?   We we export a lot of stuff and that increase would probably take us out of that business since we would not be competitive in the world market place any more. 


Now that brings me to this question.   If we did have to raise prices by 50% to cover the increased in minimum wage and if most companies had to do the same is someone making 10 bucks an hour really better off if they make 15 bucks an hour and have to pay 50% more for everything they buy?

[jone]

While this may be a fun topic to masticate, it is truly verbal masturbation. 

The United States Congress is controlled by Republicans.  Both houses.  There is not even going to be a debate for wage increases, at the national level.  Individual states may contemplate hourly minimum wage increases, but the Republicans hold more state government bodies this year than they have since the 1920s. 

The issue is a non-starter.

[lordtiberius]

This seems reasonable enough, the minimum wage coupled with other social welfare programs is striking a reasonable balance.  With these programs in place, 15 an hour is not needed.  I can see 10 or 11 an hour in the next 5 years, all things remaining somewhat equal.


Fathertime!

Why not raise the minimum wage to a $ 1 billion an hour?  We could all be rich.

[lordtiberius]

I have a question for TurboGuy.  Tell us about the education these workers are coming in with at your factory?  12 years of free education, can they read?  Write?  How is their basic math skills?

We have listened to people like Muzh, FT, Shadow, lFU and others, given them the keys to the store and see how they govern?

We have no one to blame but ourselves

[Turboguy]

I've been mulling this over for a few days, Turbo, and I still find it just so hard to believe.  I know that your town has only about 9,000 residents, but those house prices suggest an incredibly depressed, derelict area with everybody running for the hills.  The only comparable prices here would be in nearly empty mining villages.  I know that big cities are completely different, but the average house price in Auckland is around $NZ 750,000 (roughly $US 600,000), and you can't find any freehold house for under about $300,000 (and you probably wouldn't want to live there, anyway).

For what period?  Is this for a month? Here we always quote rentals at a weekly rate, and that $400-500 (a week) would only get an average three-bedroomed home in an average neighbourhood.

Yes, that is for a month.  I am not sure what you consider an "average" three bedroom house.  $ 4-500.00  here will get a nice one or two bedroom apartment or a clean but older 3 bedroom home.   The last apartment I rented was 10 years ago and it was a modern, very nice one bedroom with fireplace and a balcony and I paid $ 375.00 a month.  I think those same apartments are going now for about $ 450.00.


We had a similar discussion a long, long time ago and it was either jb or KenC that went through some of the local real estate listings and showed houses that we as low as about 8 grand.   I have two houses for sale at the moment.  One I am hoping to sell for $ 29,000 it is a small house totally remodeled, new furnace, siding, roof, bathroom, redone kitchen, clean and nice area.   The other is just in front of it and is a 7 room house with 3 bedrooms integral garage, new furnace, new whole house air, new siding, new roof, new Pella windows, great neighborhood, and I hope to get $ 59.000 for it.  I am attaching a photo of this one which might give you an idea of what 60 grand will buy here.  It won't win any beauty contests but it is a nice clean serviceable house and actually the house I grew up in.  Is it a wonderful house, no, my wife says she would not want to live there, it wouldn't bother me any though.   

[fathertime]

We have no one to blame but ourselves

On a positive note, this is one statement that you have made that is true.   What are we to be blamed FOR though? The country is not going TOO bad, all things considered. 


Fathertime!

[lordtiberius]

The country is not going TOO bad, all things considered. 


Fathertime!

You talk too much out of both sides of that mouth of yours.

[fathertime]

Yes, that is for a month.  I am not sure what you consider an "average" three bedroom house.  $ 4-500.00  here will get a nice one or two bedroom apartment or a clean but older 3 bedroom home.   The last apartment I rented was 10 years ago and it was a modern, very nice one bedroom with fireplace and a balcony and I paid $ 375.00 a month.  I think those same apartments are going now for about $ 450.00.


We had a similar discussion a long, long time ago and it was either jb or KenC that went through some of the local real estate listings and showed houses that we as low as about 8 grand.   I have two houses for sale at the moment.  One I am hoping to sell for $ 29,000 it is a small house totally remodeled, new furnace, siding, roof, bathroom, redone kitchen, clean and nice area.   The other is just in front of it and is a 7 room house with 3 bedrooms integral garage, new furnace, new whole house air, new siding, new roof, new Pella windows, great neighborhood, and I hope to get $ 59.000 for it.  I am attaching a photo of this one which might give you an idea of what 60 grand will buy here.  It won't win any beauty contests but it is a nice clean serviceable house and actually the house I grew up in.  Is it a wonderful house, no, my wife says she would not want to live there, it wouldn't bother me any though.

Nice pic.  I suspect close to Tri state area?


Fathertime!   

[Turboguy]

I have a question for TurboGuy.  Tell us about the education these workers are coming in with at your factory?  12 years of free education, can they read?  Write?  How is their basic math skills?

I would say most typically they have a GED.  We do a little test as part of our hiring process and try to make sure they can at least measure and 35% of our applicants can't.   Here are a few questions from our tests so you all can see if you could qualify to work here.


To tighten a bolt the bolt is rotated
a.  clockwise,
b. counterclockwise
c. it depends on if the bolt is a standard bolt or a metric bolt
d. none of the above.


Which is the largest.
a.     6 5/8
b.    6 19/32
c.     6 9/16
d.    They are all the same


Please add 3 3/4 and 2 5/8 and place the answer here__________

[Turboguy]

Nice pic.  I suspect close to Tri state area?


Fathertime!

Yes, that house is in Ellwood City, PA about 34 miles nw of Pittsburgh and about half way between Pittsburgh and Youngstown OH.  The population there is about 12,000 and it is a nice town with low crime and good schools.

[fathertime]

Yes, that house is in Ellwood City, PA about 34 miles nw of Pittsburgh and about half way between Pittsburgh and Youngstown OH.  The population there is about 12,000 and it is a nice town with low crime and good schools.

God's country! 


Fathertime!   

[Turboguy]

the average house price in Auckland is around $NZ 750,000 (roughly $US 600,000), and you can't find any freehold house for under about $300,000 (and you probably wouldn't want to live there, anyway).

Here we always quote rentals at a weekly rate, and that $400-500 (a week) would only get an average three-bedroomed home in an average neighbourhood.


Maybe 30-40% more here in actual dollars (but only 10-20% more in US dollars after you allow for the rate of exchange), but at least this differential is nothing like that for housing.

Now, turning to the actual debate about minimum wages -

Our minimum wage is $17 an hour.

That was very interesting but I do have to wonder.   Is someone better off making $ 17.00 an hour and needing to pay $ 400-500 a week for rent and 30-40% more for food and other things or making minimum wage here and paying $ 400.00 a month for rent and much less for everything else.  Actually a lot of the minimum wage workers qualify for government assistance and live in subsidized housing that may only cost them $ 150-200 a month for rent and they can also get food stamps. 


After my Mother retired she lived in a beautiful, modern, 7 story Senior living apartment complex with subsidized housing and the rent based on her income and she was paying less than $ 200.00 a month.  People with low incomes here don't have it all that bad and don't usually starve unless they spend all their money on booze, drugs or lottery tickets.

[Shadow]

That and it would also tend to make us less competitive in the world market place.   I am not sure people are really better off anyway.


First off minimum wage really should be determined more at the state level with the federal guidelines matching the lowest of the state numbers.  What I mean by that is that in places with a low cost of living something in the $ 7-10.00 per hour is a livable wage.  In NYC it is not and even McDonalds would not attract workers paying minimum wage.  The same applies to places like Boston, San Francisco, etc.  My point is that minimum wage is not a universal thing.   Wages need to be set more by the law of supply and demand than by laws.  If you make a healthy economy by allowing companies to compete and grow then the demand for workers will cause a wage increase.  Companies paying too little will not be able to hire and retain workers.  Minimum wage laws are a band aid and the solution is to fix the underlying illness.


I got to do a lot of relaxing over my holiday and spent some time thinking about how an increase in the minimum wage to the $ 15.00 per hour would affect my business and how I would react to neutralize it. 


One of the problems that would be particular to my business only is the way I have my pay schedule set up.  By that I mean we do more than an hourly rate.   Exactly what we do is usually a new hire for production is hired at $ 10.00 per hour.  After 90 days they are eligible for a production bonus which nearly every week will add about 3 bucks an hour to their pay and at the end of the year we have profit sharing which requires a certain profit before it does get paid but also increases as our profit increases.  This year we payed out about 60 grand, I believe, split among 10-12 people.   After a few years their hourly pay may go up.   So right now I have about 5 people making 10 bucks an hour, one making 13, one making 14 or 15 and one making 17 or 18, (plus bonuses of course)   Now if the minimum wage went up to $ 15.00 that would affect all but one or two however if the guys currently making  10 bucks an hour are moved up to 15, those making 13 bucks an hour are not going to be happy moving up to 15 are they?   No, I would have to move them up to maybe 18 and the one making 17 or 18 would have to go up to $ 22.00 or so, right?   So then it isn't just affecting the guys struggling to feed their family.  It will effect all employees and many other companies would be in the same boat. 


So my first thought was that my payroll would go from about a half million a year to about 800,000 a year.  So, maybe I could increase prices enough to cover all of that.  But then my employee taxes would also go up since they are making more money so that adds another 50 grand or so to my expenses.  It would seem logical to me that if my costs are going up by $ 350,000 a year and to come out even I would have to increase prices about 20% or more assuming that the higher prices did not reduce sales.   But then assuming other companies would be in the same boat and that they may also have to increase prices by 20% or so then it seems logical to me that my material costs could well go up by 20% just as easily.  Now if they go up by 20% then I need to add another 20-30% to cover my higher costs there so we are now looking at having to increase prices maybe 50-60% just to stay even.  Since most of my competitors are in the USA they would also need to raise prices by 50-60% to cover this increase so I would remain competitive and it would not be a big deal, right?   We we export a lot of stuff and that increase would probably take us out of that business since we would not be competitive in the world market place any more. 


Now that brings me to this question.   If we did have to raise prices by 50% to cover the increased in minimum wage and if most companies had to do the same is someone making 10 bucks an hour really better off if they make 15 bucks an hour and have to pay 50% more for everything they buy?

While the calculation may hold truth for your busness there is still a logical fallacy.
First of all, a minimum wage is to keep employees a little above the poverty line. This does mean that in NYC the minimum wage would need to be higher as where you are located.
As for raising the prices, that would depend on the part that labour plays in the cost price. For a company that has labour as main cost price would rise more, companies where labour is a small part would just need to rise 5% or less.
Calculating it ro Euro, a $15 minimum wage does seem too high, knowing that the minimum wage in my country is currently around $12 and cost of living a lot higher.