Minimum Wage questions

[Willmeister]

We've had incidents of high unemployment and high inflation (early 1980s) which isn't possible given the NAIRU argument you just used (that wages drive inflation; so there must be a 'natural' unemployment rate to keep inflation in check). The USA has also experienced a time when the unemployment rate dropped below the 'natural' rate and people screamed for Greenspan to increase interest rates to head off non-existent inflation during the Clinton administration. NAIRU theory is one of the legs that props up the Chicago School/monetarist policy. Anyways, my point being that one of those legs has been kicked out from beneath them twice. We've witnessed two incidents where wages and employment had only minimal effect upon inflation. Now they're scrambling to define 'short-run' and 'long-run' natural unemployment rates to adjust their theory.

 

[pax]

Absolutely Will. Like Germ who worked at Cosatek Computers. He started at 6$ an hour and 2 years later was at 15$ all the while computer prices were dropping like a rock and overall volume was about 500k a year. Countless examples like that. Now did Germs better wage cut into Cosa's income a little bit? Yeah but the volume more than made up for that as it was rich for the owner to begin with.

BTW finally got around to playing Star Wars Galaxies... ugh not a good start. Im gonna milk the free month but the total lack of fps action play for me I find lame. Fighting is a weird automated process. I was hoping at least for something like deus ex. Feels like EQ in SW. Also you cant run from a losing fight easily and itll be weeks before I can afford important things like vehicles. After 2 days of missioneering I can barely buy a cheapo sand people single shot gun. Music is nice of course but environment feels pretty sterile. Lots of lag too. Economy is a bit better than project entropia. Character creation is 'ok'...

Ill let you know about other shit as I go along...

Ill see how it goes till mid sept tho...

 

[RussSchultz]

So, what technological advances shall we apply to the textile/clothing industry to bring prices down and increase wages?

You can cherry pick industries (like the computer one) that have great room for technological advances, but the fact of the matter is in this competitive environment much of that has been squeezed out for commodities.

If you increase the wages in commodity industries that are labor intensive, you increase the price of the goods sold. If you do that on commodity staples like clothing, food, housing (all of which are manual labor intensive), you cause inflation. Nobody wins--the dollar value of poverty simply climbs higher.

 

[Dr. Ffreeze]

pax,

Plenty of optimistic opinions there freeze but is it realistic?

Yes the are optimistic, but yes I do think they are realistic.

Im sure some are too pessimistic

I agree there also.

I cant see how everyone is an average joe in terms of intellectual abilities.

I feel most success is the cause of drive and determination, not raw intellect. I do agree that intellect can vary, but what one lacks in raw intellect can be made up for in loads of drive and determination.

Im sure many dont exploit their abilities to the fullest for various reason such as self esteem or lack of ambition ect.

Again, yes I agree. Here is where I think there is the biggest problem lies. People sell each other short. People sell themselves short. People believe that they can't. (/GRRRRRR) This is one area where I would like to see society help itself by foster the thinking that you CAN, not give so many excuses why you CAN'T.

But you cant be serious that most have the same or near abilities.

People's raw intellect does vary, and it can vary widely, but I do not think that raw intellect is a requirement for success in this life. It is more hard work, determination, and the WILL to succeed. So, if you believe that determination is much more of a factor in success then just because raw intellect varies doesn't mean that those with lower intellect are without hope! RaR! Smarts might make it easier, but it is not the determinate factor in my opinion.

Ive been to university and seeN people study their asses off and barely pass with others cracking open a book a day or 2 before the exam and with their godly photographic memory pass with straight A's.

That is correct, but I have also seen very smart people fail classes because they lack discipline while those that are not as smart pass with B's and A's. You CAN get by on raw smarts, if you are very lucky, but with enough determination ANYONE can succeed. Please remember, I never said that some wouldn't have it easier than others.

Why can we plainly observe and accept extreme variations in physical attributes and abilities and not see the the same process with the intellect? Im not talking obvious handicaps here...

Again, I do not equate Raw Brain Power = Success. I do not equate Lack of Raw Brain Power = Failure. I take much of my thinking from my personal life. One of the many jobs I have had was running a photo lab in a large 100,000 sq. ft. department store. Stocking shelves of green beans is a bit different than mixing chemicals in a film developer. Many people were "scared" of the photo lab.(/bog) Some of the managers looked down upon the workers that worked in retail. I was able to teach and train people off of the street not only how to run the machines, but also how the chemistry worked. At the end of my job, we had the lab in the state that all other labs called if their chemistry was out. They wanted to talk to me OR my people. At the end of my job, myself AND my people were training our new photo statewide specialist. I was teaching my people how to do my job, make schedules, figure labor (not just use what upper management gave us), and they did a great job. Anyone that had the desire and drive became managers. They helped themselves OUT of a minimum wage position and into management where you could make just as much money as many doctors! From what I have seen in my life, those that really wanted to succeed did succeed regardless of raw intellect. I remember making the comment to on of my managers in training that I would much rather have someone with lesser smarts and great drive than the opposite any day.

Again, my main believe is that Drive > Raw Smarts. That is a good thing in that Drive everyone and anyone can have while Raw Smarts are god given. That is why I think there is hope for ALL to succeed.

Dr. Ffreeze

 

[Fred]

Pax, im afraid I don't agree. Inflation is accepted to be strongly correlated to wage growth, the argument is how exactly minimum wage restructures and acts on that.

Now, whether small communities (that are not truly closed systems mind you) are sensitive to this, is irrelevant. What we know is that pricing policy, most notably the Fed, is otoh very sensitive to this. NAIRU is treated somewhat as gospel over there, and minimum wage hikes are going to act directly against it.

See, its not minimum wage perse that is the problem, b/c as you said it effects so few people (again mostly part time workers), however the wage restructuring that it potentially creates does.

So while we know that its negative effects (raising unemployment, raising inflation) can be muted in some situations (for instance in labour intensive markets) its the avg case that is problematic and why its fundamentally bad policy.

 

[Willmeister]

The connection between inflation and wage growth is tenuous at best. Like I mentioned above, the theorgy that made the connection was proven false at least twice, which made adherents to this economic theory scramble to revise their theory. NAIRU is pretty much on it's way out as an economic theory.

Just as a quick illustration, look at business reports both televised and in print. Any time core, or any inflation, for that matter is discussed, wages are down at the bottom, if mentioned at all, that is. The big driving force behind inflation is energy prices. Always has been; always will.

 

[Humus]

<snip>Long post</snip>

It's encouraging to hear these wonderful stories about people who despite having everything against them were able to rise from the dirt and succeed. Unfortunately, they are the exception rather than the rule. While everyone may have the opportunity to get through, few will succeed, despite strong will power and best efforts. Also, isn't it better with a system where you can get yourself up from the dirt easily than a system where you just can, though it's very hard for many people.

Seriously, I can look at my own situation. Came from a poor workers family, had very little as did my parents. I decided to study at the university, and basically that was it. Would the education not have been free you'd have found me flipping burgers at McDonalds, or equivalent. My parents even discouraged me to study, they thought it was unneccesary and coming from a family of JWs they hoped I would set my goals in other areas. Had I also had to carry the economic burden I wouldn't have gone this far. Today I'm just about to graduate and attractive on the market and have been offered multiple jobs even before graduating.

The harder it is to get up, the fewer will get up. It's that simple. What if the labor market changes btw? You may have made your decision to get wife and kids while you were attractive on the market. After a number of years your profession isn't asked for anymore. Is it good to have me more or less forced to work really hard for a long time to get up, rather than having the society aiding me in getting up and later on back as a productive worker? Not to mention that having 3 different jobs simultaneously can be quite taxing on your body, something you might have to pay for later in life with pain in your back etc. Which will also burden the health care system btw.

Humus and Willmeister do you two think that someone should be able to have the joys of having 4 or 5 children and not have to make any sacrifices in their life? For most of us, if you have 4 or 5 children money will be tight. If you have 4 or 5 children then because of that choice it will be VERY hard for you to take European vacations or put yourself though college. It seams like you two feel that having children should not cause any sacrifices in your life. Did I misunderstand you? If not, then can you explain why you think that way?

Of course you are sacrificing loads of things when you decide to get kids and I've never said that this should not be the case. But it's definitely needed to ease parents situation to encourage more people to get kids. In Europe the expected length of life have increased to typically being around 80 years today, while in the US it is 73 IIRC. Consequently, the aging population poses a serious threat to the economy. We need more working people to carry the burden as these grow old. We need more young people in other words. As such, making efforts to make it easier for people to combine carrier with family should be applauded.

 

[Humus]

So, what technological advances shall we apply to the textile/clothing industry to bring prices down and increase wages?

Better sewing machines? How about we automate some manual tasks? Develop cheaper materials ... there are loads of things that can be done.

 

[epicstruggle]

Better sewing machines? How about we automate some manual tasks? Develop cheaper materials ... there are loads of things that can be done.

So youd rather they remove those jobs so machines can do it?
later,
epic

 

[covermye]

So, what technological advances shall we apply to the textile/clothing industry to bring prices down and increase wages?

Better sewing machines? How about we automate some manual tasks? Develop cheaper materials ... there are loads of things that can be done.

Oh man. This just keeps getting better and better. Humus, you should be a paid consultant to the textile industry. Now why haven't THEY thought of developing cheaper materials and automating some manual tasks that would give them a reasonable ROI? Geesh. What a novel idea...

 

[covermye]

By demanding higher wages you create this motivation.

You could almost consider it return on investment for employees.

There's just no way I can take this "logic" seriously. If you don't think that business owners do anything and everything in their power to increase their efficiencies, you're just silly.

Take our business, for instance. There's obviously a "sweet spot" for wages in any industry. Let's say you pay your people too little for the task asked of them (but still above minimum wage). You'll have a hell of a time keeping people employed. What's more, you'll have a hard time keeping morale up for the employees that you DO keep, which will kill your efficiency.

Pay your employees too MUCH, and your labor costs will be out of line with other in what is (in our case) a low margin, comodity like business. Your labor cost per "widget" will render you uncompetitive price-wise. Contrary to your simple statements like "just automate some manual tasks" or "just develop cheaper materials", it's just not freakin' possible in many (most?) situations. If it WERE possible, I'd have done it myself to increase efficiency from a business standpoint already. By the way, ours is a small manufacturing company in NW Indiana (low cost of living) and the "magic spot" for general plant labor that I have found is anywhere between $9 and $10.50/hr. Less than this and we have turnover problems. More than this and our labor costs are just too high. Many of our workers are married men/women with kids, lots of them who just appreciate a "decent paying" job that provides full insurance benefits for them and their family at no additional cost (another HUGE employer cost!).

The comment about "you could almost consider it a ROI for employees" only holds true for when wages are SO low, you as an employer can't keep employees and/or can't keep them motivated. Like I said, you would then need to raise prices in order to retain employees and increase your "ROI" on them. However, the "magic wage" at which this "ROI" (for lack of a better term) peaks is different for every industry and sub-industry even. You can't cover them all with a "blanket" minumum wage as that just doesn't fly.

I still don't understand what's illogical about the minimum wage as it stands, and letting the market dictate what jobs are worth. Can you honestly say our economy as a whole would be better off if the minimum wage had been twice what it has been/is over the past 10-15 years? You're gonna tell me with a straight face that this woudln't have put a rather serious damper on the economic growth we've experienced?

 

[Willmeister]

I still don't understand what's illogical about the minimum wage as it stands, and letting the market dictate what jobs are worth.

If we let the market set labour wages and standards, we'd still have child labour and people working twelve hours a day, seven days a week for next to no pay. Having the market decide all things had led our predecessors in the nineteenth century from one economic disaster to another as we moved from one boom-and-bust cycle to another. The final, and worst one, occurred in 1929 which has pretty much been forgotten. Take the banking and insurance industries for example. One of the biggest reasons the Depression was so bad, was because banks were speculating with depositer's money in the stock market. This is why the reserve system was tightened and banks and insurers were barred from speculative forms of investment. By 1992?, the banking industry was right back at it as rules governing banks were greatly loosened. There was also an issue with the banks having bad loans, but that didn't lead to public panic as much as depositers saw their money disappearing, never to return, from their bankbooks. The Depression was like that snake that was swallowing it's own tail... and the banking crisis was at the centre of it.

Can you honestly say our economy as a whole would be better off if the minimum wage had been twice what it has been/is over the past 10-15 years? You're gonna tell me with a straight face that this woudln't have put a rather serious damper on the economic growth we've experienced?

You also can't honestly say that it would have either. No one knows how anything would have turned out if one small thing had been changed. Economies can adapt to all sorts of shocks, you don't think it could surivive a slow increase in minimum wage?

 

[covermye]

If we let the market set labour wages and standards, we'd still have child labour and people working twelve hours a day, seven days a week for next to no pay.

Maybe you misunderstood me. I stated that I don't see the problem with the minimum wage AS IT STANDS, and letting the market set prices for various jobs AS IT DOES NOW. In other words, I see nothing wrong with the way it sits today. Nowhere did I say (nor did anybody else) that I think we should do away with any and all labor laws. Where did that come from?

Having the market decide all things had led our predecessors in the nineteenth century from one economic disaster to another as we moved from one boom-and-bust cycle to another. The final, and worst one, occurred in 1929 which has pretty much been forgotten. Take the banking and insurance industries for example. One of the biggest reasons the Depression was so bad, was because banks were speculating with depositer's money in the stock market. This is why the reserve system was tightened and banks and insurers were barred from speculative forms of investment. By 1992?, the banking industry was right back at it as rules governing banks were greatly loosened. There was also an issue with the banks having bad loans, but that didn't lead to public panic as much as depositers saw their money disappearing, never to return, from their bankbooks. The Depression was like that snake that was swallowing it's own tail... and the banking crisis was at the centre of it.

And what in the world does this have to do with keeping the minimum wage where it is (and adjust it for inflation from here on out)? That's all I said. If a specific job requires more work/responsibility than your basic burger flipping opening, it will pay more. That's a fact. Maybe not enough to make the general manufacturing laborer as wealthy as others, but it'll surely (and does now) pay more than minimum wage. This argument really came out of left field, man... Thanks for the history lesson on banks, though.

Can you honestly say our economy as a whole would be better off if the minimum wage had been twice what it has been/is over the past 10-15 years? You're gonna tell me with a straight face that this woudln't have put a rather serious damper on the economic growth we've experienced?

You also can't honestly say that it would have either. No one knows how anything would have turned out if one small thing had been changed. Economies can adapt to all sorts of shocks, you don't think it could surivive a slow increase in minimum wage?

Not only do I think it COULD have, it DID survive a slow increase in minimum wage over this time period. I'm not arguing that it's been extravagant, but in real 2003 dollars, 1989's minimum wage was $4.96/hr.

For those that argue that minimum wage doesn't drive inflation, look at this chart showing inflation-adjusted minimum wage:

Now what time periods saw ridiculous inflation levels vs. the time period(s) that saw umprecidented economic growth?

Again, I agrue that the minimum wage, signifigant or not, is at a reasonable level for its intended purpose, that most all labor laws should remain in effect (so you don't try to assume I'm all for child labor 7 days per week again), and that the MW should be inflation-adjusted yearly from this point on...

 

[pax]

Truth is had we adjusted the MW since the mid 70's wed have a MW of about 10-12 today... So if a deal could be had that MW would be adjusted from here on instead of doubling it overnight I think we could find some settlement on the issue here. Id take a MW adjustement for inflation for the last 15 years and move from there 8) ...

Your Cie Covermye does pretty much what our local McCains does to not only discourage unionization by keeping wages and benefits half decent but also avoid political action in favor of better wages as well as your turnover rate were unions not present. Its a good thing. It means that the MW is not viable for most employers even for jobs with little need of educated or highly skilled workers.

So a mandated MW in fact would affect so few employees and employers I really dont think its that much of a big deal to start with. Its really about helping those who cant be helped by politics or unions as they are so few in number to start with they have no political weight.

 

[indio]

I used to work for BFI now it is Allied Waste. I was a garbageman. I worked in Boston and was in the Teamsters Union I made @ 51,000 / yr. regular 40 - 45 hour work weeks.
This is a good wage for hardwork.
I moved to a more rural area in Massachusetts . I transfered to another division in BFI. This division was non-union . My pay decreased 30% which I it expected do to the cost of living associated with the area. What I didn't expect was my workload increased to the point of insanity.
I picked up 100lbs every 30 seconds for 10-15 hours in every weather condition. All because they wouldn't hire the 3-4 more ppl. it took to do the job. Ppl. would last literally 15 minutes on the job before they would quit. It was ludicrous. To make a long story short , large corporations that require manual labor and are non-union will hire someone , run them into the ground until they become injured or quit, and then hire someone new.

I'm sure your saying "picking up garbage , how hard could it be?" BFI had 94 fatalities and over 3000 serious injuries that required hospitolization in the last year I worked there, this is out of 45,000 employees at the time.
I personally almosted killed me and 3 other ppl. when some genius decided there were going to throw out a FULL tank of propane and hide it in the bottom of their garbage. I almost crushed in the truck with me and 2 others standing right there.
I have endless stories like this.
The moral of the story is the CEO of Allied waste makes 22 million/yr and is 200 something in the Forbes 500 highest paid CEO's
If Allied waste fired the CEO and used the money to staff area that are understaffed the would be able to hire close to 700 ppl.

In short there is a need for a crackdown on corporate pay. People get trapped in there jobs (like I was) because of responsilbilties and suffer greatly at no tangible benefit to the company. For every dollar the save by abusing a worker the throw 3 times that into the CEO's stock options or other corporate perks. It's disgusting. Minumum wage is a joke.
Organize a Union it's the only way to retain your rights. Average Union due cost is 2 hours pay per month. In the teamsters union if you retire TODAY after 30 years your monthly check is $4500. The individuals getting these checks made $2/hr when the started 30 years ago. Support your local Unions , expect a RESPECTABLE living wage for your valuable trade.

 

[Joe DeFuria]

Ppl. would last literally 15 minutes on the job before they would quit. It was ludicrous.

That implies then one of two things, or both:

1) that there are plenty of people lined up willing to do the job for the pay that was offered
2) That the job doesn't entail any special or unique skill that is not in plentiful supply, and is therefore easily replaceable.

To make a long story short , large corporations that require manual labor and are non-union will hire someone , run them into the ground until they become injured or quit, and then hire someone new.

As long as there are people willing to do the work at that pay level, that is true.

I'm sure your saying "picking up garbage , how hard could it be?"

Actually, I'm not saying that. I'm sure it's hard physical labor, but it's also not particulary skilled labor either. There's nothing dishonorable about the job...and if you're not satisfied with the compensation for it, then move on to something else.

I personally almosted killed me and 3 other ppl. when some genius decided there were going to throw out a FULL tank of propane and hide it in the bottom of their garbage. I almost crushed in the truck with me and 2 others standing right there.

That sucks...but I don't see how that's related to unfair treatment from your employer. (I'm not saying your employer is guilt free by any stretch, but I don't see the relevance of this particular case.)

In short there is a need for a crackdown on corporate pay. People get trapped in there jobs (like I was) because of responsilbilties....

Well, this gets to the heart of the matter that Dr. Ffreeze was speaking about.

1) "Why" are you trapped in this particular job? What is it that did not allow you to obtain a job that you would be more satisfied with? What "responsibilites" are you referring to that made you "trapped?"

2) Are you still there now? Why, or why not? Did what you consider to be crappy pay actually motivate you to get out of that situation faster?

I personally don't think there is a need for a crack-down on corporate pay. I do think Unions have their role...principally I do think that corporations / management needs a strong, unified, opposing voice to take required steps to ensure the safety of their workers.

I don't think a Union's purpose is to ensure pay at some level that the union feels is appropriate. I can certainly see that more workers can habe an impact on safety, I can see the place for Unions lobbying for more workers in this respect. So, to the extent that higher wages are required to attract enough employees to ensure safety, I don't have much of a problem with it.

But to demand wages for something deemed a "respectable living wage?" No.

I worked at a "large corporation" that was not a union shop...LaRoche pharmaceutical plant. And we were proud to not be a union shop.

 

[covermye]

So a mandated MW in fact would affect so few employees and employers I really dont think its that much of a big deal to start with. Its really about helping those who cant be helped by politics or unions as they are so few in number to start with they have no political weight.

Wrong, Pax. A mandated MW in fact affects MANY employees/employers. We set our wages where they are RELATIVE to the MW. If the MW increases to the $10 range, for instance, we would have to pay $3-$6 more per hour to remain at the same level of competitive pay. Don't you see that?

MW increases don't just affect those receiving MW, or those receiving marginally more (~$1/hr). They affect the entire working class...

 

[Humus]

Better sewing machines? How about we automate some manual tasks? Develop cheaper materials ... there are loads of things that can be done.

So youd rather they remove those jobs so machines can do it?
later,
epic

Sure. There's no self-interest in just having people busy. We don't work for the sake of working alone. If it can be offloaded to machines, that's great. Those who lost their jobs will then be available for other jobs at other places and can then productively contribute there. The same amount of people can now produce more, and voila, economic growth again.

 

[Humus]

Oh man. This just keeps getting better and better. Humus, you should be a paid consultant to the textile industry. Now why haven't THEY thought of developing cheaper materials and automating some manual tasks that would give them a reasonable ROI? Geesh. What a novel idea...

There are loads of people in the textile industry spending a good deal of time and money in research for better material and production methods without me or anyone else having to tell them. Why do people think there's nothing that can be improved? It's not like we have reached the absolute optimum of productivity in the textile industry. I didn't know the textile industry was static ...

 

[covermye]

Now you just talked in a complete circle. You argued that only when wages are increased do employers spend resources on increasing efficiency. I argued that they do it ALL THE TIME, a point that you just agreed with... This last post makes me think that you've agreed with me all along... Which is it, Humus?