[B]Intro[/B]
I'll start this off with a fictional scenario. There are only two mining companies in South Africa, one that pays well above minimum wage: Company A; and the other that pays minimum wage: Company B. Both companies are pretty equal in performance and both of course want to come out ahead. Although Company B has managed to compete with Company A by hiring low skilled labor, Company B does not really have any options to gain an edge that Company A would not have. Company A does not have the choice of cutting its workers salaries as its workers are highly skilled and demanding, but Company A does have one trick up their sleeve... To raise the minimum wage.
What effect would this have? Simple, it would force Company B to pay their employees a higher wage which in turn would raise the prices of Company B's product making them less competitive. It would have no ill effects on Company A because everyone within Company A makes well above the minimum wage. In effect, Company B will eventually be put out of business, and these low skilled workers will be out of a job.
To some this might some like some contrived scenario, yet it has been the tool of many foreign unions and businesses in African nations. Most of these unions and businesses have been made up of white racists and it has been used quit effectively to eliminate competition from local business. Over the years this has resulted in a large distrust in western entrepreneurs in many African countries, and large amounts of protective legislation has been made against foreign business.
[B]Intention Does Not Matter[/B]
Certainly nobody would argue the the intention of a piece of legislation somehow affects its total outcome. You could make an argument as to how the law is interpreted, but as far as the minimum wage law goes, there is only one interpretation. If the opening example appears to be true and backed up in practice, why would it differ when backed by people with good intentions?
The situation in Africa is very similar here in America, high skilled workers who are not affected by the minimum wage are lobbying for a higher minimum wage. The only difference is that these lobbyist are not racist and are portrayed to care about the lower class worker. Yet regardless if they sincerely care, their support of the minimum wage will have the same negative effects it does in Africa. Worse are the groups that lobby in the US that lobby to raise the minimum wage in third world countries. Just like in the intro, competing unions and businesses are the ones lobbying for this, so it really has to be called into question as to whether they really care about the third world nation, or if they'd rather just eliminate their competition.
Consider the reasons why a third party supports a cause that does not affect them. Take Honey Nut Cheerios raising breast cancer awareness. Logically, this makes little sense. But to most anyone, their purpose is clear: to give the company a good name and to raise awareness of breast cancer. Some might consider this exploitation in that the company is trying to make money as a sponsor of breast cancer awareness, but this should really only be an issue if it is at someone's loss, which it is not. Everyone gains, the company gets a good reputation with increased sales and the public becomes more aware of breast cancer. As far as Unions and other groups advocating raising the minimum wage, it is a similar situation, except with their success, it is at a loss to those who now can't compete, just like the example in the intro.
[B]Who Does Minimum Wage Harm Most?[/B]
It harms the low class worker with few or no skills. I feel as though I should qualify that with more specific groups. Teenagers are low skilled workers for obvious reasons, they have low skills and no work experience. Low skilled workers are comprised of high school drop outs, illegal immigrants, the handicapped, and the elderly. Certainly there are exception to this, there may be some high school drop outs who are very successful. But in general there is no reason to believe an individual with few or no skills is likely to be successful.
A worker in some way can be thought of an investment, and their resume can be though of their risk. A worker with a good resume shows low risk. It is a safe investment because the worker is pretty much guaranteed to make a profit. A worker with an alright resume may be of moderate risk, they aren't likely to lose you money, and you are likely to profit. A worker with a bad resume shows quite a bit of risk and would be someone not to hire. A worker with no resume is essentially a blind pick. It would be the equivalent to picking stocks without knowledge of the stocks you are picking.
Non skilled and low skilled workers are blind picks. The employer has no clue if hiring them will at all be profitable or not, so what incentive is there to take the risk? Overall, what this results in is employers avoiding hiring non skilled workers unless there are no alternatives. And to be clear, the issue certainly is not that an employer will never higher an unskilled worker, it is just that an employer will only hire a worker at a wage that they believe them to be worth. Though a worker may not be profitable and worth the risk at $7.50 an hour, they may be profitable and worth the risk at $4.75 an hour.
The issue in simple terms is that the low class worker cannot get their foot in the door. Certainly many do, put a large portion do not, especially those who do not have access to good education. It is well known that blacks receive far inferior education in America, and as a results of this they have far less skills than whites. This puts black teenagers at a huge disadvantage to white teenagers as the employer is going to hire the applicant who is most qualified. Certainly one could argue that this is racism on side of the employer, yet this is quite the stretch to make if their decision was based on qualification.
[B]Minimum Wage Ensures Unemployment[/B]
A large issue with people's understanding of legislation similar to this is that it only goes one way. That the minimum wage only ensures that the employer pays the worker an amount greater or equal to it. But it also works the other way around. It make it illegal for someone to work, even voluntarily, below minimum wage. It is as much a restrain on the employer as it is on the worker.
Really, this makes as much sense as the laws forbade the selling of organs. There is no law against working for free, but there is a law against working for a penny.
Surely if the issue is the low skilled laborers are not attractive enough at minimum wage, then it is easy to say that they won't be hired. The minimum wage ensures their unemployment.
[B]Why The Minimum Wage Should Be Abolished[/B]
It should be clear that if the issue is employers not wanting to pay a rate that they do not believe a laborer is worth, then the solution is to abolish the minimum wage. This will not be at a loss to the unskilled laborer as in the alternate scenario they were jobless. Furthermore, now that they got their foot in the door, they are now able to attain skills that will help them compete in the job market.
Abolishing the minimum wage would also be a great means of ridding the form of corporatism talked about in the introduction.
To go further, the minimum wage law is an abridgment of contractual rights. Two individuals out to have the right to come to an agreement that they both believe the benefit from. They should be the only ones to have a say in the contract. Similar to trade contracts, labor contracts must be consensual and both parties must believe they are befitting at the time. Certainly if an individual wants to work below what you'd consider a decent wage, why shouldn't they be allowed to?
[B]Why That Wouldn't Lead To Capitalist Pigs Bidding Down Our Wages To The Lowest Possible Price[/B]
Well, surely the title is misleading because employers will always try to negotiate for the lowest possible wage just as you'll be negotiating for the highest possible wage. That is how all trade works. But the idea behind the title is more this idea that all workers wages will be bid down to extremely low levels and that there will be no way to beat the system.
I've heard this type of argument a few times and it's a bit hard to follow, though in some sense it is a bit poetic because the phrasing seems to describe the very fallacy it is. But even assuming that such a slippery slope is conceivable, the outcome make no sense unless you also assume everyone is the same in every way.
Furthermore, this idea that employers would be able to drive down wages in such a way in all areas is ridiculous. What this statement effectively does is say that employers will not complete for labor, which is untrue. What would realistically happen in such a scenario is that people would refuse to work for a wage they did not agree on. Like in the introduction, Company A could not lower their worker's wage because they knew they workers would not agree on it. The same is true of Company B, and there is no reason to assume people are incapable of negotiating their own wage.
[B]That It?[/B]
I could have taken this a lot of directions, but I preferred a direction that would stay away from research as others sources do that better. It has been debunked time and time again, the minimum wage does not protect the poor, if anything it protects the wealthy. Have I not convinced you? Look into the matter for yourself.
[B]Further Readings[/B]
[url]http://www.econlib.org/library/Enc/MinimumWages.html[/url]
[url]http://www.economist.com/node/8090466?story_id=8090466[/url]
[url]http://www.creators.com/conservative/walter-williams/minimum-wage-s-discriminatory-effects.html[/url]
[url]http://townhall.com/columnists/walterewilliams/2006/04/26/minimum_wage,_maximum_folly[/url]
[url]http://knowledge.wpcarey.asu.edu/article.cfm?articleid=1828[/url]
[url]http://www.cato.org/pubs/pas/pa106.html[/url]
[url]http://mises.org/daily/1950[/url]
[url]http://www.cato-at-liberty.org/2009/07/24/reporting-the-minimum-wage/[/url]
The minimum wage also prevents people getting fucked over.
[QUOTE=carcarcargo;32270535]The minimum wage also prevents people getting fucked over.[/QUOTE]
How so? Can you provide an argument?
thanks for posting your poly-sci 101 essay here.
The problem is your assumption that Company A and Company B will compete rather than create a trust.
Minimum wage harms the low-skilled worker? No shit sherlock, you just allowed employers to bash them with even lower pay. What incentive is there when you're working what is now deemed 'below minimum wage'.
[QUOTE=Pepin;32270577]How so? Can you provide an argument?[/QUOTE]
Because people going in for low skill jobs will be forced to compete with other potential workers by offering to do the job for a lower wage than the next man, essentially being forced to fuck themselves over to get the job.
So the work that I'm doing now isn't actually worth $7.50?
You're telling me that my hours are actually worth [B]LESS[/B] than that? I think I should believe that you don't actually have a job, or at least have never had a job that pays minimum.
[QUOTE=ewitwins;32270667]So the work that I'm doing now isn't actually worth $7.50?
You're telling me that my hours are actually worth [B]LESS[/B] than that? I think I should believe that you don't actually have a job, or at least have never had a job that pays minimum.[/QUOTE]
If employers could I'm sure you would be paid less.
[QUOTE=GetBent;32270679]If employers could I'm sure you would be paid less.[/QUOTE]
Oh, I believe it. That's why people who work in tip situations absolutely depend on the tips that people provide because of the fact that their steady pay is so low.
most minimum wage jobs involve extremely difficult labor and they should be getting paid at least $10 an hour. Minimum wage needs to be raised to around $10 an hour, and business owners should get a large tax break to make up for the added cost of labor to avoid raising the cost of living across the country.
[editline]13th September 2011[/editline]
[QUOTE=ewitwins;32270722]Oh, I believe it. That's why people who work in tip situations absolutely depend on the tips that people provide because of the fact that their steady pay is so low.[/QUOTE]in all states the employer is required by law to make up the difference between minimum wage and actual wage in situations where the employee works for tips and doesn't make above minimum wage between the tips and paycheck.
[QUOTE=GetBent;32270679]If employers could I'm sure you would be paid less.[/QUOTE]
This and the fact the only reason you would get payed more than that is that if you have a non standard degree or certificate(higher than high school diploma) the only reason you are payed more is so that other companies or competition cannot have you, usually in your contract is you cannot go to another company in the same field for a period afterwards as well.
Okay, I know this is off topic, but how many people came to this just to see how many dumbs the OP would get? I can't be the only one can I? To stop from cluttering further, just rate informative if you came in to see how many dumbs the OP had.
My primary argument, and it is entirely uneducated so don't rip me apart on it, is against the final point you make in regards to employers driving it down with employees driving it up.
You seem to think that employers will be forced to some happy medium, because prospective employees will refuse to work for the low price that employers set. While it is true that there are prospective employees who will refuse to work for that low price, I am confident that there will be others that [b]will[/b] be willing to work for that low price. This includes, but is not limited to, people who come over from other countries to make money for their families and who have little to no desirable working skills, young people entering the work force for the same reason, the poor and the depraved, among others...
Basically anyone who does not have these desirable skills.
By removing the minimum wage, you could effectively enforce a divide in the working force. You will have employers that will drop their wages down as low as they can go, because they're not looking for any special skills. They just need people to move boxes, stack shelves, whatever. The employees who were previously paid minimum wage will largely refuse to continue working here, so they leave or get the boot. Then the unskilled workers, who have previously been having difficulty finding work, crawl in to take their place. I mean, working for a few dollars beats the shit out of no income, right?
At the same time, you will have employers who will keep their wages what they used to be, but raise the standard of quality for their employees. "Well hell," they may think to themselves, "I'm paying seven times the amount, per employee, as Business B for shelf-stackers. For this price, I can get someone a lot more qualified! I won't accept any more shelf-stackers!"
In doing so, all those shelf-stackers who were previously being paid minimum wage will most likely end up having to downgrade down to the lower-paying jobs, because the businesses they used to work for may no longer decide that they are sufficient for what they are being paid.
Previously, the employers had little choice, because minimum wage forced them to pay that amount. It was either fork out the minimum wage, or have no shelf-stackers at all.
All a hypothetical, and I have very little political science or economics education to back it up. Still, though, I think it is at least feasible, and if nothing else, raises a good concept to be considered in this argument.
Just to piss off the OP I'm going to say that the minimum wage should be raised to the living wage.
If you work a job, you should be able to support yourself. Let's end underemployment.
[QUOTE=Lankist;32270602]thanks for posting your poly-sci 101 essay here.
The problem is your assumption that Company A and Company B will compete rather than create a trust.[/QUOTE]
Your argument is that companies do not compete? Really? In this situation, it is entirely in Company A's self interest to raise the minimum wage.
[QUOTE=CabooseRvB;32270613]Minimum wage harms the low-skilled worker? No shit sherlock, you just allowed employers to bash them with even lower pay. What incentive is there when you're working what is now deemed 'below minimum wage'.[/QUOTE]
Somehow you assume that the low skilled worker already has a job, yet this assumption is incorrect. Minimum wage is keeping them from a job. Abolishing it would allow them to earn an income, as opposed to the alternative which is earning to income.
[QUOTE=carcarcargo;32270639]Because people going in for low skill jobs will be forced to compete with other potential workers by offering to do the job for a lower wage than the next man, essentially being forced to fuck themselves over to get the job.[/QUOTE]
Yet such an argument doesn't make sense as it somehow assumes that the employer is the only one involved in labor contracts. There are two parties involved, and in order to attract reliable and skilled laborers, the employer will have to meet ends with the laborer. This is the kind of slippery slope that I don't quite understand.
[QUOTE=ewitwins;32270667]So the work that I'm doing now isn't actually worth $7.50?
You're telling me that my hours are actually worth [B]LESS[/B] than that? I think I should believe that you don't actually have a job, or at least have never had a job that pays minimum.[/QUOTE]
You have the right to make a contract with your employer as to how much you think your worth. I have no business in determining the private contracts you make with another individual.
[QUOTE=GetBent;32270679]If employers could I'm sure you would be paid less.[/QUOTE]
Surely if your labor was not worth what you produced. Yet employers provided raises for their employees all the time. 95% of Americans make above minimum wage. Employers usually find a great deal of value in their laborers, and the employer has plenty of incentive to ensure that the employee is happy, stays productive, and keeps working there.
There are plenty of economical arguments that state the same thing OP is saying. I don't happen to agree with him, but I think most of us didn't read the entire thing.
[QUOTE=Zeke129;32270973]Just to piss off the OP I'm going to say that the minimum wage should be raised to the living wage.
If you work a job, you should be able to support yourself. Let's end underemployment.[/QUOTE]
Raise the minimum wage you also raise the prices businesses have to pay. They'll stop hiring workers and start making cuts, creating more unemployment, congrats.
there's 0 evidence that the minimum wage has affected job creation in anyway. rhetoric cannot replace evidence.
[url]http://www.dol.gov/oasam/programs/history/reich/reports/pay.htm[/url]
[QUOTE=Pepin;32270985]
Yet such an argument doesn't make sense as it somehow assumes that the employer is the only one involved in labor contracts. There are two parties involved, and in order to attract reliable and skilled laborers, the employer will have to meet ends with the laborer. This is the kind of slippery slope that I don't quite understand.[/QUOTE]
Do you know why most manual labour is done in countries like china and india? Because there is no minimum wage over there and people have no choice but to work for 50p an hour otherwise they'll get undercut by someone desperate enough to take a low wage.
[QUOTE=Hazrd24;32271065]Raise the minimum wage you also raise the prices businesses have to pay. They'll stop hiring workers and start making cuts, creating more unemployment, congrats.[/QUOTE]
The economy has more depth than that though, some argue that if you raise it, consumer spending increases as well, causing sales to increase.
[editline]13th September 2011[/editline]
[QUOTE=thisispain;32271074]there's 0 evidence that the minimum wage has affected job creation in anyway. rhetoric cannot replace evidence.
[url]http://www.dol.gov/oasam/programs/history/reich/reports/pay.htm[/url][/QUOTE]
Probably a good source still but it IS from 1996...
[QUOTE=Zeke129;32270973]Just to piss off the OP I'm going to say that the minimum wage should be raised to the living wage.
If you work a job, you should be able to support yourself. Let's end underemployment.[/QUOTE]
But then unemployment would rise?
Also (To op now) what happens when the money you earn isn't enough to support your basic needs, do you just sink into debt? Another problem with this idea is how do you decide where unemployment benefits are as if a wage is lower then people have no incentive to become employed, making the labour market stagnate.
[QUOTE=Zeke129;32270973]Just to piss off the OP I'm going to say that the minimum wage should be raised to the living wage.
If you work a job, you should be able to support yourself. Let's end underemployment.[/QUOTE]
I really wish this was possible but sadly it would probably make things worse.
[QUOTE=carcarcargo;32271076]Do you know why most manual labour is done in countries like china and india? Because there is no minimum wage over there and people have no choice but to work for 50p an hour otherwise they'll get undercut by someone desperate enough to take a low wage.[/QUOTE]
There are no doubt workplace violations and horrible conditions, but there are also quite a few cases of those outsourced jobs paying better than default local jobs there. My point is that that might be less related to minimum wage there, and more related to companies just cutting expenses. I think some people argue that minimum wages cause this actually.
Nah, we need regulation that stops the big guy from stomping on the little guy- not deregulation that lets big corporations add some spikes underneath their metaphorical boots as well.
Pretty sickening to think of a scenario where unemployed people get so desperate that they compete with other job applicants over who will accept the least amount of money.
[QUOTE=Hazrd24;32271065]Raise the minimum wage you also raise the prices businesses have to pay. They'll stop hiring workers and start making cuts, creating more unemployment, congrats.[/QUOTE]
People making more money = people paying more taxes
People paying more taxes = the ability to fund more social services like healthcare and education
Public healthcare = employers no longer need to pay for health insurance for their employees
Better education = employees are more educated and more deserving of a higher wage
Notice how it all falls into place
But zeke this is a utopia it can't possibly exist
well it does exist, it's called scandinavia
[QUOTE=Zeke129;32271152]People making more money = people paying more taxes
People paying more taxes = the ability to fund more social services like healthcare and education
Public healthcare = employers no longer need to pay for health insurance for their employees
Better education = employees are more educated and more deserving of a higher wage
Notice how it all falls into place
But zeke this is a utopia it can't possibly exist
well it does exist, it's called scandinavia[/QUOTE]
scandinavian utopa = more bjork
everyone wins
[QUOTE=Zeke129;32271152]People making more money = people paying more taxes
People paying more taxes = the ability to fund more social services like healthcare and education
Public healthcare = employers no longer need to pay for health insurance for their employees
Better education = employees are more educated and more deserving of a higher wage
Notice how it all falls into place
But zeke this is a utopia it can't possibly exist
well it does exist, it's called scandinavia[/QUOTE]
To be honest most Scandinavian countries have rather low populations and can thus afford that
I've heard all the for minimum wage abolishment arguments there are. At the end of the day, I still think it is a terrible idea. You have a point when you say, all employers will not grossly lower wages because they will compete for labor with one another.
You have a point here, but I would argue there is very little if any competition for unskilled laborers, especially in this economy. The competition is all at the top jobs. I am pretty confident that there will be no lack in unskilled laborers for quite a while.
You say that if the wages employers were offering were too low, nobody would work the job, thus the employer would offer a more desirable wage, but again, this is not true in this economy. I know too many people on probation, young men that got a girl pregnant, foreigners, and released felons that WILL work for ANY amount of money.
In my opinion, if you think it's okay to pay somebody $5 an hour for any unskilled labor job in America, that is disgusting. Unskilled labor work tends to be the most physically demanding and grueling.
[QUOTE=Pepin;32270985]Your argument is that companies do not compete? Really? In this situation, it is entirely in Company A's self interest to raise the minimum wage.[/QUOTE]
No, companies do not invariably compete. Corporations are in it for profit. If there is more opportunity for profit in establishing a trust than competition (i.e. artificial scarcity, universally low wages, localized monopolies, status-quo unsafe work environments, etc.) they will act in a unified interest.
You know very little about the free market if you do not understand the dangers of trusts. They are one of the biggest reasons why unions were established. Competing companies will work together if it is in their interests, and everybody who isn't a billionaire loses when they do.
The idea that competition rules supreme in a Laissez-faire market is a myth. That's why we abandoned it over a century ago.
I think less regulation makes the fictional story told in Deus Ex less fiction and more likely than anything. Almost feels like a warning.
Minimum wage protects unskilled laborers.
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