Please help me understand how a $15 minimum wage is a good idea.

Taxes will be reduced because everyone currently at minimum wage most likely also receives food stamps and housing subsidies. The higher wage would drastically reduce the number of people eligible for those benefits and thus we won't need such high taxes to support this population.

But that certainly won't backfire like it is doing in Seattle where workers are asking for less hours because they are losing their subsidies for housing and food...

inthepdx wrote:

Taxes will be reduced because everyone currently at minimum wage most likely also receives food stamps and housing subsidies. The higher wage would drastically reduce the number of people eligible for those benefits and thus we won't need such high taxes to support this population.

But won't $15 just become the new $7.50 in terms of buying power? Meaning everything will increase in price to make-up for increased wages so the same people will still need government assistance?

Folks, money has no intrinsic value. If you raise the minimum wage, it's not as though there is magically more wealth in society. If you take a job that's worth 7.50/hr now and suddenly mandate that the wage be raised to 15, you haven't magically increased the value of the job. You've only devalued the dollar.

I've always paid my staff well. Then they stick around. Their expertise is a huge asset to my business. They have a stake it in and are compensated well. They enhance my reputation and I make more money.

Yes, I make higher profits because I pay my worker more than my competitors do.

I'm in the customer screen printing business, and I sell on quality, not on price. I have no desire to win the race to the bottom.

WhitePony wrote:

But won't $15 just become the new $7.50 in terms of buying power? Meaning everything will increase in price to make-up for increased wages so the same people will still need government assistance?

No.

Everything won't double in price.

The amount of people that make minimum wage (especially for full time work) is a small percentage of the population so it would have a small economic effect.

You are not doubling everyone's pay.

You do increase payroll tax income.

You do reduce government benefits that need to be paid out.

That helps the government budget in two directions.

There will certainly be negative effects and less hiring.

So, it's not like a higher minimum wage the better to the point where you just make it real high.

It's like a company pricing it's products.

Raise the price and you get more income per sale but you get fewer sales.

There is a price that is just right to maximize revenues.

There is a wage that isn't too high or too low that will maximize net benefits.

Right now that wage is probably somewhere between $7 and $15.

L L wrote:

There is a wage that isn't too high or too low that will maximize net benefits.

Right now that wage is probably somewhere between $7 and $15.

That is what I was getting at, I am not against the minimum wage, but $15 an hour would devastate the businesses in my area if it went into effect tomorrow.

I agree with your premise.

Minimum wage needs to be localized, and it is. Some states and cities have higher minimums.

But the federal minimum wage has to be a leader and set a standard.

It just becomes too political, though.

Ideally, the wages would be based on a table that correlates to local economics and on age of the person. Pay teenagers less, etc.

But that's complicated and impossible to pass.

They like the simple one size fits all minimum wage.

What would happen if the US Federal government set a minimum price for cars, making it illegal to sell a car for less than $20000?

Car sales would drop, due to law of demand. Some people can't afford a car for that much money. Car manufacturers that build cheaper cars are not better off. They would go out of business, because cars that used to be sold for $10K would not be worth paying $20k for.

The minimum wage is no different. The minimum wage causes unemployment for those people who are not worth the minimum wage, due to lack of skills or experience.

I would also add that the minimum wage laws are anti-freedom. Minimum wage laws prevent freedom loving Americans from charging less than a certain amount for their time.

What would happen if the US Federal government mandated that everyone buy an elephant?

Please go read this article. Many companies that employ at low wages are not paying the actual cost of that employee and are relying on the welfare system to cover the gap. That burden affects all of us. But the corporation is directly benefiting while the rest of us cover the gap in the form of taxes.

http://www.cbsnews.com/news/how-low-wage-employers-cost-taxpayers-153-billion-a-year/

L L wrote:

What would happen if the US Federal government mandated that everyone buy an elephant?

The mandate would be ignored.

L L wrote:

Ideally, the wages would be based on a table that correlates to local economics and on age of the person. Pay teenagers less, etc.

But that's complicated and impossible to pass.

They like the simple one size fits all minimum wage.

It's impossible to pass because it's a dumb idea. If the government lowers the minimum wage for teenagers companies will heavily discriminate against older people in order to keep costs low. Anything other than 1 size fits all would hurt the groups that the policy is intended to help.

TAA wrote:

It's impossible to pass because it's a dumb idea. If the government lowers the minimum wage for teenagers companies will heavily discriminate against older people in order to keep costs low. Anything other than 1 size fits all would hurt the groups that the policy is intended to help.

As does the minimum wage itself.

Lets use some econ terms!

Wages are an input to whatever output a business makes. If min wage goes up, prices go up. If demand stays constant-- if people still buy the same amount of burgers, or haircuts, or whatever--- then we say demand is "inelastic," and the increase in wages is a direct transfer from consumers to low income workers. This would lead to a more equal society.

But! if demand for things made by minimum wage earners goes down as price goes up-- if demand is "elastic"-- then companies make less money, and so they hire fewer min wage earners. This would create unemployment.

Min wage is essentially a tax on low income employers. It raises the price for labor for them. If that tax causes them to not go into business in the first place, then the min wage creates "deadweight loss," or profitable activity foregone by all parties because of external pressure.

How elastic is demand in the American economy? How much deadweight loss is created by minimum wages? We don't know. Econ tries to answer these questions.

I personally favor eliminating the minimum wage and replacing it with an expanded earned income tax credit, which helps the same people more efficiently because it doesn't penalize employment.

If you are making minimum wage, it is an awesome thing.

But actually I agree with the OP...it might make sense to use the GS pay scale "locality pay". For example, federal workers in the SF Bay area get a 35.75% boost relative to the base pay. Greater Pittsburgh in a relatively cheaper area gets a 16.68% boost. People in the boonies don't get a pay boost.

Say the base minimum wage is $9/hr. In the greater SF region that would make for ~$12.20/hr pay.

Agreed

What about all those folks making around the $15/hr wage and above. How do you think morale is going to affect those workers who worked their way up from the bottom of the pay scale and are now back on the bottom. Will businesses be nice to those employees and proportionally increase their wage? I am guessing not so much.

One wage group is moving up in the world and everyone else will effectively be moving down unless they are given proportional raises. But then you will be back at square one is 3-5 years when inflation deals with all the extra money in the economy. The Govt will have effectively made the pool or poor Americans larger and then even more people will be on Govt subsidies.

Then we can try it again and maybe it will work out better...

inthepdx wrote:

What about all those folks making around the $15/hr wage and above. How do you think morale is going to affect those workers who worked their way up from the bottom of the pay scale and are now back on the bottom. Will businesses be nice to those employees and proportionally increase their wage? I am guessing not so much.

One wage group is moving up in the world and everyone else will effectively be moving down unless they are given proportional raises. But then you will be back at square one is 3-5 years when inflation deals with all the extra money in the economy. The Govt will have effectively made the pool or poor Americans larger and then even more people will be on Govt subsidies.

Then we can try it again and maybe it will work out better...

Boy you beat me too it. How can you raise the minimum wage to $15.00/hour and not expect someone already making that amount to demand an immediate raise? Should someone working part time at Taco Bell make the same wage per hour as a full time dental assistant?

Just an idea of jobs that pay less than $15/hour

You guys act like places that employ min wage employees can operate with fewer employees. What's the grocery store going to do? Have no one watch the self checkout lane. How about McDs ? Only a single employee instead of 3 for the lunch rush? I suppose Starbucks drinks will make themselves ? No raising min wage will cut the money at the top, redistributing it from the most to least needy. It could come from the middle but if you cut the salaries of the ppl who actually do stuff, they leave and your company fails.