Would eliminating the Minimum Wage result in lower unemployment?

[$5 submissions]

Will knocking out the minimum wage result in less unemployment and more job opportunities?

[JamesGw]

In regard to actual unemployment claims? I doubt it. People would get more money from unemployment than they would working minimum or below minimum wage.

The only way I see this decreasing unemployment is by decreasing overhead for businesses so they can hire more professionals. I guess there would be fewer jobless teens? Maybe? I dunno.

[FeelMyTube]

Yes it would. This is textbook microeconomics (taught in evey MBA / business class).

There's always someone willing to work for $1 less than minimum wage (the alternative is unemplyment).

Minimum wage benefits those who get it at the expense of the employees that would be willing to work for less and can't find work and the employers that need cheaper labor but cannot hire at less than minimum wage.

[Rochard]

Originally Posted by FeelMyTube

Yes it would. This is textbook microeconomics (taught in evey MBA / business class).

There's always someone willing to work for $1 less than minimum wage (the alternative is unemplyment).

Minimum wage benefits those who get it at the expense of the employees that would be willing to work for less and can't find work and the employers that need cheaper labor but cannot hire at less than minimum wage.

LOL. There are people willing to work for food.

[CodeR70]

Originally Posted by FeelMyTube

Yes it would. This is textbook microeconomics (taught in evey MBA / business class).

There's always someone willing to work for $1 less than minimum wage (the alternative is unemplyment).

Minimum wage benefits those who get it at the expense of the employees that would be willing to work for less and can't find work and the employers that need cheaper labor but cannot hire at less than minimum wage.

But is that a good thing?

IMHO this is already what is wrong in this world. Just a few hours ago I saw a job posting for 15 people for less then $1 an hour on oDesk. That is so very bad. IMHO that is almost the same a scamming people.

In the long run the unemployment would only shift from one part of the world to another. Also, lowering the wages will not magically create new jobs. If a task cost 100 man-hours then that will not change if the wages change. It's still a 100 man-hour job. It's just cheaper.

[GatorB]

Originally Posted by $5 submissions

Will knocking out the minimum wage result in less unemployment and more job opportunities?

nope. what it wil do is lower wages. Then those people quailify for even more welfare and foodstamps since thier incomes are now lower. How does this help? Wher does the money for welare and foodstamps come from? Also if you have a choice betwen welfare/foodstamps or working for $3 an hour which would you do?

Oh also all those millions that now have less income now have less money to spend and of course comsumer spending is 70% of the economy that isn't good. Also lower wages means less SS and Medicare taxes coming in which means those programs go in default sooner and raises the deficit even more. Of course less income means more likely to default on payments for credit cards, car payments etc etc. That's not good for the economy.

If anything the minimum wages needs to be HIGHER not lower. Some people rather have 100 people making $5 and hour. I'd rather have 50 people making $10 an hour.

Look at it this way. The quality of food at places like McDonald's is questionable already. Imagine what it would be if they paid their employees only $3 an hour.

[blackmonsters]

Originally Posted by $5 submissions

Will knocking out the minimum wage result in less unemployment and more job opportunities?

I will say no way in hell.

There are so many minimum wage jobs that can't be filled already because nobody
wants to work all day basically to pay for their gas to and from work.
So how does paying them less than they are not willing to work going to work out better.



It's just an myth promoted by business owners that are always looking for a way to
make more money. They see thay have 25 employees and can count the money if they
reduce wages. They imagine that no one will quit because they are such a fine person.

If the minimum wage were struck down it would only create a massive wave of new
labor unions.

People have short memories, the reason we have minimum wage is because workers
revolted, not because some lawmaker had a good heart.

[Brujah]

Do you think companies making record profits, will finally create jobs if the minimum wage is lowered? They didn't when the tax cuts were kept.

[porno jew]

the usual mises and lewrockwell.com garbage.

[TylerBang]

People will simply work harder and longer for less until they can no longer physically work.

Look at China, they work for pennies and now shiny new cities that sprung up over the last 15 years are in recession because capital flight to places like Vietnam, where they will work for a bowl of rice.

[CodeR70]

But what about?

"Would creating a Maximum Wage result in lower unemployment?"

[FeelMyTube]

Economics of the minimum wage


An analysis of supply and demand of the type shown in introductory mainstream economics textbooks implies that by mandating a price floor above the equilibrium wage, minimum wage laws should cause unemployment.[16][17] This is because a greater number of people are willing to work at the higher wage while a smaller numbers of jobs will be available at the higher wage. Companies can be more selective in those whom they employ thus the least skilled and least experienced will typically be excluded.

According to the model shown in nearly all introductory textbooks on economics, increasing the minimum wage decreases the employment of minimum-wage workers.[18] One such textbook says:

If a higher minimum wage increases the wage rates of unskilled workers above the level that would be established by market forces, the quantity of unskilled workers employed will fall. The minimum wage will price the services of the least productive (and therefore lowest-wage) workers out of the market. ... The direct results of minimum wage legislation are clearly mixed. Some workers, most likely those whose previous wages were closest to the minimum, will enjoy higher wages. Others, particularly those with the lowest prelegislation wage rates, will be unable to find work. They will be pushed into the ranks of the unemployed or out of the labor force.[19]

It illustrates the point with a supply and demand diagram similar to the one below.

It is assumed that workers are willing to labor for more hours if paid a higher wage. Economists graph this relationship with the wage on the vertical axis and the quantity (hours) of labor supplied on the horizontal axis. Since higher wages increase the quantity supplied, the supply of labor curve is upward sloping, and is shown as a line moving up and to the right.[20]

A firm's cost is a function of the wage rate. It is assumed that the higher the wage, the fewer hours an employer will demand of an employee. This is because, as the wage rate rises, it becomes more expensive for firms to hire workers and so firms hire fewer workers (or hire them for fewer hours). The demand of labor curve is therefore shown as a line moving down and to the right.[20]

Combining the demand and supply curves for labor allows us to examine the effect of the minimum wage. We will start by assuming that the supply and demand curves for labor will not change as a result of raising the minimum wage. This assumption has been questioned.[citation needed] If no minimum wage is in place, workers and employers will continue to adjust the quantity of labor supplied according to price until the quantity of labor demanded is equal to the quantity of labor supplied, reaching equilibrium price, where the supply and demand curves intersect. Minimum wage behaves as a classical price floor on labor. Standard theory says that, if set above the equilibrium price, more labor will be willing to be provided by workers than will be demanded by employers, creating a surplus of labor, i.e., unemployment.[20]

In other words, the simplest and most basic economics says this about commodities like labor (and wheat, for example): Artificially raising the price of the commodity tends to cause the supply of it to increase and the demand for it to lessen. The result is a surplus of the commodity. When there is a wheat surplus, the government buys it. Since the government doesn't hire surplus labor, the labor surplus takes the form of unemployment, which tends to be higher with minimum wage laws than without them.[5]

So the basic theory says that raising the minimum wage helps workers whose wages are raised, and hurts people who are not hired (or lose their jobs) because companies cut back on employment. But proponents of the minimum wage hold that the situation is much more complicated than the basic theory can account for.

One complicating factor is possible monopsony in the labor market, whereby the individual employer has some market power in determining wages paid. Thus it is at least theoretically possible that the minimum wage may boost employment. Though single employer market power is unlikely to exist in most labor markets in the sense of the traditional 'company town,' asymmetric information, imperfect mobility, and the 'personal' element of the labor transaction give some degree of wage-setting power to most firms.[21]

Criticism of the "textbook model"

The argument that minimum wages decrease employment is based on a simple supply and demand model of the labor market. A number of economists (for example Pierangelo Garegnani,[22] Robert L. Vienneau,[23] and Arrigo Opocher & Ian Steedman[24]), building on the work of Piero Sraffa, argue that that model, even given all its assumptions, is logically incoherent. Michael Anyadike-Danes and Wyne Godley [25] argue, based on simulation results, that little of the empirical work done with the textbook model constitutes a potentially falsifying test, and, consequently, empirical evidence hardly exists for that model. Graham White [26] argues, partially on the basis of Sraffianism, that the policy of increased labor market flexibility, including the reduction of minimum wages, does not have an "intellectually coherent" argument in economic theory.

Gary Fields, Professor of Labor Economics and Economics at Cornell University, argues that the standard "textbook model" for the minimum wage is "ambiguous", and that the standard theoretical arguments incorrectly measure only a one-sector market. Fields says a two-sector market, where "the self-employed, service workers, and farm workers are typically excluded from minimum-wage coverage? [and with] one sector with minimum-wage coverage and the other without it [and possible mobility between the two]," is the basis for better analysis. Through this model, Fields shows the typical theoretical argument to be ambiguous and says "the predictions derived from the textbook model definitely do not carry over to the two-sector case. Therefore, since a non-covered sector exists nearly everywhere, the predictions of the textbook model simply cannot be relied on."[27]

An alternate view of the labor market has low-wage labor markets characterized as monopsonistic competition wherein buyers (employers) have significantly more market power than do sellers (workers). This monopsony could be a result of intentional collusion between employers, or naturalistic factors such as segmented markets, search costs, information costs, imperfect mobility and the 'personal' element of labor markets. In such a case the diagram above would not yield the quantity of labor clearing and the wage rate. This is because while the upward sloping aggregate labor supply would remain unchanged, instead of using the downward labor demand curve shown in the diagram above, monopsonistic employers would use a steeper downward sloping curve corresponding to marginal expenditures to yield the intersection with the supply curve resulting in a wage rate lower than would be the case under competition. Also, the amount of labor sold would also be lower than the competitive optimal allocation.

Such a case is a type of market failure and results in workers being paid less than their marginal value. Under the monopsonistic assumption, an appropriately set minimum wage could increase both wages and employment, with the optimal level being equal to the marginal productivity of labor.[28] This view emphasizes the role of minimum wages as a market regulation policy akin to antitrust policies, as opposed to an illusory "free lunch" for low-wage workers.

Another reason minimum wage may not affect employment in certain industries is that the demand for the product the employees produce is highly inelastic;[29] For example, if management is forced to increase wages, management can pass on the increase in wage to consumers in the form of higher prices. Since demand for the product is highly inelastic, consumers continue to buy the product at the higher price and so the manager is not forced to lay off workers.

Three other possible reasons minimum wages do not affect employment were suggested by Alan Blinder: higher wages may reduce turnover, and hence training costs; raising the minimum wage may "render moot" the potential problem of recruiting workers at a higher wage than current workers; and minimum wage workers might represent such a small proportion of a business's cost that the increase is too small to matter. He admits that he does not know if these are correct, but argues that "the list demonstrates that one can accept the new empirical findings and still be a card-carrying economist."[30]

http://en.wikipedia.org/wiki/Minimum...e_minimum_wage

[ThunderBalls]

In August of 1996 Clinton signed a 90 cent increase for minimum wage into law. The very next month the stock market took off and continued for the next 4 years marking the biggest economic expansion in US history. Draw your own conclusions.

[raymor]

I see fast food companies advertising $9.50 / hour.
Minimum wage is $7.25. I conclude that even indulged jobs for teenagers already pay more than minimum wage, so minimum wage is no longer relevant.

[TheSquealer]

Originally Posted by ThunderBalls

In August of 1996 Clinton signed a 90 cent increase for minimum wage into law. The very next month the stock market took off and continued for the next 4 years marking the biggest economic expansion in US history. Draw your own conclusions.

.com boom.

Clinton didn't cause runaway and irrational investment online or into online advertising. Before 1999, online advertising was 3 years away (on its trajectory) from outpacing the GDP of the nation itself as everyone scrambled to get a part of online biz, invest in online biz, flip .coms etc.

My conclusion is that your implied conclusion ignores a lot of obvious facts.

[ThunderBalls]

Originally Posted by TheSquealer

.com boom.

Clinton didn't cause runaway and irrational investment online or into online advertising. Before 1999, online advertising was 3 years away (on its trajectory) from outpacing the GDP of the nation itself as everyone scrambled to get a part of online biz, invest in online biz, flip .coms etc.

My conclusion is that your implied conclusion ignores a lot of obvious facts.

The only conclusion I've drawn is that raising the minimum wage is not detrimental to the economy and most likely it helps the economy.

[Joshua G]

The impact would be marginal, given minimum wage jobs comprise a small part of the labor market. The number is so far below todays cost of living, few people will work for it, & nobody that wants a dependable employee offers it.

[StinkyPink]

Originally Posted by raymor

I see fast food companies advertising $9.50 / hour.
Minimum wage is $7.25. I conclude that even indulged jobs for teenagers already pay more than minimum wage, so minimum wage is no longer relevant.

This is because teens don't want to work in fast food industry... either does anyone else, but if you were laid off and you have rent a car payment and 3 kids to feed, well you will work anywhere, and fast food knows it.

[Redrob]

Eliminating free money for unemployed, fully-functioning individuals after six weeks would lower unemployment. Just my opinion.

[BJ]

I got these Burmese dudes in my yard digging 2 meter deep holes for 6 dollars a day. Occasionally I go outside and hose them down because Im a nice guy and its hot as shit out.

[TheSquealer]

Originally Posted by ThunderBalls

The only conclusion I've drawn is that raising the minimum wage is not detrimental to the economy and most likely it helps the economy.

Based on that fact alone, you might as well look at the weather on that date in Atlanta, GA at 4:00pm in the afternoon and deduce that slight overcast with a chance of rain also most likely helps the economy for the following years.

You are taking a single piece of information out of context and making assumptions and without exploring/considering any other contributing factors to economic growth at the time.

[ThunderBalls]

Originally Posted by TheSquealer

Based on that fact alone, you might as well look at the weather on that date in Atlanta, GA at 4:00pm in the afternoon and deduce that slight overcast with a chance of rain also most likely helps the economy for the following years.

You are taking a single piece of information out of context and making assumptions and without exploring/considering any other contributing factors to economic growth at the time.

Says the guy who attributes the only factor being the dot com boom.


And your idiotic comparison of the weather is about the weakest argument you could make, but then again that's all ya got.

[blackmonsters]

Originally Posted by CodeR70

But what about?

"Would creating a Maximum Wage result in lower unemployment?"

Isn't that the argument made from anti-union coporations?

I mean, you know, when it's a strike.

A strike to raise the union minimum wage.

[96ukssob]

it would only raise the amount of people on welfare and most likely yield to less jobs.

A friend of a friends was just telling me how she is looking for a job and has been for a few weeks now. She got a few offers, but for min wage or slightly hirer. She needs more to support her family and wouldnt take the $7.50/hr job because she wouldnt be able to interview for jobs that would allow her to support herself.

[brassmonkey]

Originally Posted by Rochard

LOL. There are people willing to work for food.

would you hire them? you'll come back and all your copper pipes yanked out of the walls.

[PornoMonster]

Originally Posted by raymor

I see fast food companies advertising $9.50 / hour.
Minimum wage is $7.25. I conclude that even indulged jobs for teenagers already pay more than minimum wage, so minimum wage is no longer relevant.

Winner Winner!!!

[GatorB]

Originally Posted by Redrob

Eliminating free money for unemployed, fully-functioning individuals after six weeks would lower unemployment. Just my opinion.

Because people can get jobs that don't exist right? US companioes are hording over $2 TRILLION. Money that can be used for creating jobs. They REFUSE. I say tax hording money at 80%. Then they'll spend it.

[tony286]

Originally Posted by Redrob

Eliminating free money for unemployed, fully-functioning individuals after six weeks would lower unemployment. Just my opinion.

Its not free money they pay for it.

[tony286]

Originally Posted by GatorB

Because people can get jobs that don't exist right? US companioes are hording over $2 TRILLION. Money that can be used for creating jobs. They REFUSE. I say tax hording money at 80%. Then they'll spend it.

Bingo! Wanna Know what the two last great booms reagan and clinton had in common? They both raised taxes. Reagan first dramatically lowered them and the economy was in the gutter. Then he did the largest tax increase in peacetime and the economy boomed. But unfortunately they both had what obama doesnt have a backbone .

[gideongallery]

Originally Posted by CodeR70

In the long run the unemployment would only shift from one part of the world to another. Also, lowering the wages will not magically create new jobs. If a task cost 100 man-hours then that will not change if the wages change. It's still a 100 man-hour job. It's just cheaper.

you do realize that a 100 man hour job that would not be profitable at minimum wage CAN become profitable at $1/hour.

reducing the minimum wage would create jobs in that way.

[GatorB]

Originally Posted by gideongallery

you do realize that a 100 man hour job that would not be profitable at minimum wage CAN become profitable at $1/hour.

reducing the minimum wage would create jobs in that way.

would YOU work for $1 an hour? no.

Also using YOUR logic you could make the case that a 100 man hour job would be REALLY profitable if you just enslaved people and paid them nothing. So do you advocate slavery?

[GatorB]

Originally Posted by gideongallery

you do realize that a 100 man hour job that would not be profitable at minimum wage CAN become profitable at $1/hour.

reducing the minimum wage would create jobs in that way.

If you run a business and you can't make a profit paying people minimum wage perhaps you shouldn't be in business and perhaps you should be working for someone who has the intelligence to run a business.

[$5 submissions]

Is there a racial component to the US minimum wage laws as mentioned by Prof. Milton Friedman below? Or it is just academic hokum that has to bend to the hard contours of post- New Deal political realities?

[porno jew]

why don't you post the article on lew rockwell today that influenced this thread.

[raymor]

Originally Posted by TheSquealer

Based on that fact alone, you might as well look at the weather on that date in Atlanta, GA at 4:00pm in the afternoon and deduce that slight overcast with a chance of rain also most likely helps the economy for the following years.

You are taking a single piece of information out of context and making assumptions and without exploring/considering any other contributing factors to economic growth at the time.

Absolutely. I wore blue today. Obama wussed out today. Therefore, my wearing blue causes Obama to wuss out.

They also ignored the fact that the economy was booming BEFORE Clinton did anything. Clinton's first budget was in 1997. The economy was rocking from 1992-1996. By the time Clinton did his thing, in 2002 there was a near recession.

[seeme]

Its all one big circle. If you paid people below min wage then how can they afford to rent somewhere to live? so then rent needs to be lowered also. Min wage is there for a reason

[pornguy]

I think one of the biggest issues with unemployment right now is not the Lack of jobs. its the Lack of desire to take a Lesser job than the person had before.

[TheSquealer]

Originally Posted by ThunderBalls

Says the guy who attributes the only factor being the dot com boom.


And your idiotic comparison of the weather is about the weakest argument you could make, but then again that's all ya got.

No, I pointed out that it's "a factor". One of many.

You don't need to be a wizard in economics to understand how insanely complex and economy is, not to mention all of the the global factors influencing the economy.

But you do need to be ignorant to attribute the effects of one single, minuscule economic non-event to a sudden and unprecedented boom in economic growth.

It must be weird to be so dumb and be sitting there thinking "gee, why don't they just raise minimum wage again so we can make the economy boom for the next 5 years.. why don't they "get it" it, like I do" - I can see why you get angry and frustrated. Paul Markham gets mad when he yells at fire hydrants and they don't answer him. You guys should get together.

[GatorB]

Originally Posted by pornguy

I think one of the biggest issues with unemployment right now is not the Lack of jobs. its the Lack of desire to take a Lesser job than the person had before.

Really? Because where live even places like McDonald's and wal-mart are not hiring.

[$5 submissions]

Originally Posted by pornguy

I think one of the biggest issues with unemployment right now is not the Lack of jobs. its the Lack of desire to take a Lesser job than the person had before.

You have a point. There's a stigma.

[CodeR70]

Originally Posted by gideongallery

you do realize that a 100 man hour job that would not be profitable at minimum wage CAN become profitable at $1/hour.

reducing the minimum wage would create jobs in that way.

No it doesn't. It's still a 100 man-hour job. It doesn't matter if it's making profit or not.

[signupdamnit]

It baffles me that seemingly intelligent people can't see what exactly would happen. It would mostly drive wages down for anyone who is even near minimum wage. And no people do not want to take a job which pays them less because they perceive that the employer is taking advantage of them. You also have to consider that most future employers will want to know what they made at their last employer. If they take a pay cut they could be digging a hole for themselves with future employers too. It's understandable that people want to avoid this. Some might argue one year of unemployment is better than taking a 30-40% pay cut.

[Barry-xlovecam]

Yes, people would form long lines to get jobs that pay $3.00/hr </sarcasm>

In Bangladesh ....

[ThunderBalls]

Originally Posted by TheSquealer

No, I pointed out that it's "a factor". One of many.

You don't need to be a wizard in economics to understand how insanely complex and economy is, not to mention all of the the global factors influencing the economy.

But you do need to be ignorant to attribute the effects of one single, minuscule economic non-event to a sudden and unprecedented boom in economic growth.

It must be weird to be so dumb and be sitting there thinking "gee, why don't they just raise minimum wage again so we can make the economy boom for the next 5 years.. why don't they "get it" it, like I do" - I can see why you get angry and frustrated. Paul Markham gets mad when he yells at fire hydrants and they don't answer him. You guys should get together.

Yea it must be weird, why don't you fill us in? Show me where I said it was a single factor. That would have been you with your dot com remark. My point was it didnt hurt the economy like retarded people like you spout off like some kind of Limbaugh talking parrot. If ignorance is bliss you must be ecstatic.

[$5 submissions]

Originally Posted by Barry-xlovecam

Yes, people would form long lines to get jobs that pay $3.00/hr </sarcasm>

In Bangladesh ....

The argument isn't aimed at people who already have skills. The focus here is on the other end of the spectrum.

[GatorB]

Originally Posted by $5 submissions

The argument isn't aimed at people who already have skills. The focus here is on the other end of the spectrum.

Hmmmm $3 an hour for busting your ass or welfare? hard choice.

[GatorB]

Originally Posted by gideongallery

you do realize that a 100 man hour job that would not be profitable at minimum wage CAN become profitable at $1/hour.

reducing the minimum wage would create jobs in that way.

well minimum wage is $7.25 so paying $1 an hour for 100 manhour job nets $625. kind of a shitty profit for such a job. As I said if that's the best you can do then do something else.

[TheSquealer]

Originally Posted by ThunderBalls

Yea it must be weird, why don't you fill us in? Show me where I said it was a single factor.

Your right, you didn't say this. I get so used to the political crap here that I jumped to the conclusion that you were making a few points along the typical party line - that Clinton made the economy move etc., that increases to minimum wage help, not hurt etc. etc.

I apologize. It wasn't until i reread what you wrote that I realized you might not have been meaning it that way at all.

But then again you did chose to finish with the Limbaugh remark which tells me my initial assumption was probably correct.

[shimmy2]

even haiti has a minimum wage

[nation-x]

Lowering the minimum wage is just another todo on the New World Order list as they work to expand world markets... the US is the the way to the third world.