I rather believe that min wage affects ecomony positively. Why do we have economic growth? Well, because companies aim for higher efficiency. The harder times for the employer, the higher effort is spent on improving efficiency. Asking for higher wages in general drives the economic development in a positive direction. Your higher salary gives you more power to consume. At the same time the additional cost for the employer makes the employer take actions that improves the companys efficiency. And voila, we got economic growth.
Minimum Wage questions
- Thread starter Dr. Ffreeze
- Start date
Humus said:
You forgot to include in your equation above that higher income costs employers more and so therefore to remain profitable they must in turn raise their pricing and voila no one gains anything. Raising the min wage is not beneficial in the long run it only increases the cost of production and that in turn gets dropped on the consumers, who are most frequently min wage earners. Further it often puts small businesses that are borderline in/out of business closer to out of business killing employment unnecessarily often. In the long run raising min wage does little good.
Sabastian said:
I'd say your logic is all back-the-front. For example, IIRC, go read up on the history of Henry Ford's original production system. I believe he paid his workers a relatively large wage yet still managed to turn out affordable vehicles.
A manufacturer would like to have his (not outrageously expensive) product in everyone's home but if only N% of the population have a reasonable income then that limits sales. A minimum income means that he has potentially far more customers and items become cheaper if more are produced. Certainly there is an increased per-item cost (due to higher wages) but the R&D, marketing, rent, etc and other costs are reduced per item.
i think a better question to ask is would you buy:
[with all things equal but the price of the product]
1) some random cog for $10, where the employees are paid a good wage.
or
2) same cog for $5, where the employees only get the minimum wage.
i would not even hesitate to buy 2. I have to watched out for my own wallet first. what would you do.
later,
epic
[with all things equal but the price of the product]
1) some random cog for $10, where the employees are paid a good wage.
or
2) same cog for $5, where the employees only get the minimum wage.
i would not even hesitate to buy 2. I have to watched out for my own wallet first. what would you do.
later,
epic
Simon F said:
My business history might be a bit off, but didnt he fight his workers right to unionize. I cant remember exactly why he didnt want them. if some one could inform me please do. Im sure its something simple like he didnt want to raise wages.
later,
epic
My grandfather worked as a labor negotiator for Ford (unionbuster, I suppose would also be the right name). I have a collection of old metal disc recordings of meetings that my grandfather kept, one of which (according to family lore) supposedly has Ford ordering a hit on somebody. My father told me that their car had been shot up several times growing up.epicstruggle said:
Dunno if its actually true, but my grandmother heavily damaged one of the disks (scratched it) so that nobody in the family would try anything stupid trying to make a quick buck by blackmailing anybody.
But anyways, Ford could afford to pay his people more, because they saved money using the assembly line.
Its tough to save money using assembly lines to clean toilets, make burgers, landscape, paint houses, sew clothing, or any other sort of dexterous manual labor.
Silent_One
Newcomer
Simon F wrote:
What's that have to do with Sabastian's point? Turning out affordable vehicles was more of a result of Ford's production methods not higher wages. Indeed, based on your theory, Ford could have sold more vehicles to meet the N% income of the population by paying his employees lower wages.
What's that have to do with Sabastian's point? Turning out affordable vehicles was more of a result of Ford's production methods not higher wages. Indeed, based on your theory, Ford could have sold more vehicles to meet the N% income of the population by paying his employees lower wages.
I was just trying to say that mass-production (which clearly relies on a mass market) allows efficiency which in turn makes it possible to pay a decent wage. Sabastian was saying that the increase in wage would decrease the sales yet this didn't appear to affect to be the case with the Model-T.Silent_One said:
Quite possibly. I don't expect he was an angelepicstruggle said:
Willmeister
Newcomer
A lot of people might know that Ford wrote a book about 'Jews' and received a medal from Hitler himself. Fewer know that Ford returned the medal a year later in disgust.
Nothing to do with this thread, but an interesting piece of trivia no less.
Nothing to do with this thread, but an interesting piece of trivia no less.
Silent_One
Newcomer
This did not appear to be the case with the Model-T because it was one of the first times mass production was ever applied. You are correct that efficency can make it possible to pay a decent wage. Mass production also allowed the product to be sold at a price that the "mass market" could afford. However Sabastians argument still applies. Suppose Ford paid a more modest wage to his employees making the Model-T. With lower labor costs the price of the Model-T could have been lower, and the Mass market could have been greater. Now suppose Ford gives his employees a raise, to a more "decent wage". The labor costs go up, the car costs go up, and the mass market that can afford the car shrinks.
Willmeister
Newcomer
The effect of minimum wage on the economy is largely irrelevant. If it does, it's more positive than negative.
The best way right now of increasing disposable income where it counts it to increase the personal exemption in income tax. $6000 in Canada is way too low. The NDP wanted to increase that to $15,000 and even the Tories under Joe Clark supported increasing it to $12,000. Where we the Liberals? Oh, that's right. Doing what they do best. Taking orders from Bay Street.
The best way right now of increasing disposable income where it counts it to increase the personal exemption in income tax. $6000 in Canada is way too low. The NDP wanted to increase that to $15,000 and even the Tories under Joe Clark supported increasing it to $12,000. Where we the Liberals? Oh, that's right. Doing what they do best. Taking orders from Bay Street.
Dr. Ffreeze
Regular
Hmm,
Could someone explain to me why we need a minimum wage again? What is to stop me from getting a different job if the one I work at pays too little? Really I don't quite understand, no one is forced to work at Job_X.
Hey, buddy, would you like to work for me for $2.00 an hour?
A] Yes
B] No
It is my choice. If I thikn $2 is too low, then I should better not pick choice A. How can you choose to work for $2 an hour job and then complain that it is a $2 an hour job?
Dr. Ffreeze
PS. I am talking about legal non forced citizens.
Could someone explain to me why we need a minimum wage again? What is to stop me from getting a different job if the one I work at pays too little? Really I don't quite understand, no one is forced to work at Job_X.
Hey, buddy, would you like to work for me for $2.00 an hour?
A] Yes
B] No
It is my choice. If I thikn $2 is too low, then I should better not pick choice A. How can you choose to work for $2 an hour job and then complain that it is a $2 an hour job?
Dr. Ffreeze
PS. I am talking about legal non forced citizens.
Dr. Ffreeze said:
If your qualifications only allow you to get a job sweeping the street and no employer is encouraged to offer a decent wage, you can bet that there won't be another job with a decent wage available. If there is no sensible lower bound on wages then it may not be economical for the individual to actuall work (expending energy (i.e. food), transport costs, clothing etc).
In any reasonable (humane) society, some form of unemployment benefit is available as a safety net**. Although a minority will always 'dole-bludge', it is obviously better for a government to have people working than be on benefits and if the minimum wage is reasonable, there is far more incentive for people to actively seek work. This reduces the tax burden for benefits (as well as raise more income) and so could be used to generate more growth and/or reduce personal or company tax.
Dr. Ffreeze
Regular
Simon F,
Thanks for responding. I do have some serious questions, and they are not designed just to tick people off.
At the end of the day, who is responsible if I only am able to sweep streets? I would think I would be responsible for not developing any marketable job skills. It looks like this might be where we differ the most. It looks like you think that society has a responsibility to pay people a living wage regardless of their job skills, while I think each person should take responsibility for themselves and make sure they have a marketable job skill. Agree or disagree?
If 30 people want to work for me sweeping streets for $3 an hour, then I have 30 people that think that is a better deal than not working and getting $3 an hour. If I am an employer, and I run a business cleaning streets for a living, then if I cannot find workers that are willing to work for $3 an hour, then I will need to raise my wages until people want to work for me.
Again, if they don't work, then the employer can't get people to clean streets. He will go out of business or somehow attract the workers he needs.
I would agree with this. I would like people that get unemployment work for their income, not just free handouts.
Any comments?
Dr. Ffreeze
Thanks for responding. I do have some serious questions, and they are not designed just to tick people off.
At the end of the day, who is responsible if I only am able to sweep streets? I would think I would be responsible for not developing any marketable job skills. It looks like this might be where we differ the most. It looks like you think that society has a responsibility to pay people a living wage regardless of their job skills, while I think each person should take responsibility for themselves and make sure they have a marketable job skill. Agree or disagree?
If 30 people want to work for me sweeping streets for $3 an hour, then I have 30 people that think that is a better deal than not working and getting $3 an hour. If I am an employer, and I run a business cleaning streets for a living, then if I cannot find workers that are willing to work for $3 an hour, then I will need to raise my wages until people want to work for me.
Again, if they don't work, then the employer can't get people to clean streets. He will go out of business or somehow attract the workers he needs.
I would agree with this. I would like people that get unemployment work for their income, not just free handouts.
Any comments?
Dr. Ffreeze
Joe DeFuria
Legend
Simon F said:
I have to disagree with this, along the same lines as Dr. Ffreeze.
There may be more incentive for people to activley seek minimum wage jobs...but there is then by definition less incentive for people to seek higher wage jobs....ones that require a higher skill development.
It can just as equally and rationally be argued that the higher the minimum wage, the less incentive there is to personally develop oneself, and reach their full potential as a contributing member of society.
I view unemployment benefits as similar to minimum wage jobs: neither should be seen as a permanent way of life...both should be temporary means to just get by while you seek to better yourself for a higher paying / more valuable position.
And to be clear, I am NOT saying that there is anything "dishonorable" about holding a minium wage job. I do think it's a bit dishonorable to hold any job, and "demand" that you are compenstated more than what the market is willing to support, because you think it's worth more.
Dr. Ffreeze said:
Nature and nurture, I know that sucks and I know that using this kind of thinking can lead to disaster ... but it is still true.
The bunny cannot pull itself out of the hat by its own ears.
Having people who are able to work always do so for their benefits is the same as creating a fundamental right to work ... while Im for it in theory it can have some obvious problems.
There still needs to be a safety net for those unable (one way or the other) to work though IMO. I dont like social darwinism. Having some buraucrat remove this safety net on some subjective evaluation of the quality of work someone does to me does not sound like a good idea ... so I dislike making it not only a right but also a duty to work.
I think it is far better to provide another stimulus for people to work rather than brute force and threats (in a way that is what the minimum wage is). An alternative would be to simply give everyone a basic wage, and let them earn whatever they want on top. This could still leave some people who want to work unemployed of course ...
Dr. Ffreeze said:
It is preferrable that wages are increased through normal market forces than anything else. With unions the min wages can be set up through a deal between the worker's organisation and the employers.
Unfortunately, things doesn't always work out that well. There are always unemployment, so you will always have people who will be more or less forced to take really low-wage jobs since there's nothing else being offered to them. Often social programs to take care of the unemployed are made such that it the amount of money you receive goes down over time to encourage you to search for a job. Also, it's commonly set up such that unless you actively search for a job and don't take a job being offered to you you won't receive any more unemployment allowances. All to ensure that you're not just lazy and are fine with just burdening the welfare system. Under such situations min wage is neccesary. The min wage limit still should be quite low, but it should be higher than what you can recieve through social benefits.
Dr. Ffreeze said:
Here's a great argument why society must ensure equal opportunity (though not equal wages, difference in wages are neccesary to encourage developing said skills). A very good argument for things like free university level education, so that everyone has the opportunity to develop higher skills if one so desires. If developing skills would require a large investment, many people just don't have the possibility to develop their skills.
Joe DeFuria
Legend
Humus said:
There's an obvious counter argument to that.
By making investment in developing your skills a personal investment, you encourage smart investing, vs. ad-hoc investing. That is, when you know your own resources are on the line, this not only encourages more dedication to developing your own skills, but it encourages you to more carefully consider what skills you want to foster and develop.
