Boston Gal's Open Wallet

And even if it did only benefit teens, they spend money like no tomorrow on stuff so that would be a good thing for the economy. I know willy nilly spending is anathema to the pf community but teens do spend.

 

With uneployment where it is many places may need to offer more than the minimum to hire people. I have not problem with a floor, but the market can easily set an higher rate when people are scarce to fill the positions.
I am tired of hearing about people you have worked minimum wage for 20 years and trying to raise kids. What did they do to improve themselves to be worth more?

 

It doesn't benefit teenagers. It makes it more expensive to hire them, which will mean that more of them will be unemployed.

At CVS and HomeDepot I've already noticed that they have self-checkout registers. Do you really think businesses will pay any price to hire someone with no skills and job experience?

 

If the minimum wage increases from $5.15/hour to $7.25/hour that would represent a 41% increase in labor costs across the board for businesses.

This WILL accelerate the rate of inflation.

 

It has been shown that raising the minimum wage does help create new jobs. When give more money to the people who need it most, they are going to spend it at local establishments, which only benefits everyone.

 

I just don't think that higher wages are the answer to the problem. We all have to work to increase our skills that have higher market value and need to educate ourselves more financially. Throwing more money at a problem is not the answer. Financial education is the answer.

 

I agree with previous posters that a rise will mean more unemployment for low-wage workers and faster inflation.

I'm also concerned that prices at low-cost stores (Wal-Mart, Target, Big Lots) and resturants will rise by quite a bit -- cutting into what millions of us can afford to spend (or save.) These factors could combine to bring down our national economy.

 

A majority of people won't get pay raises from a minimum wage increase, but will have to pay higher prices for goods and services. This will cause people to buy less because they can only afford less. Won't that cause the economy to worsen?

Besides, you have worked a couple minimum wage jobs and look at your net worth now... $418,628.25
It doesn't seemed to have hurt you much.

 

I agree with the idea that inflation would probably go up. When people on the lower level get paid more, it costs more, and so prices will have to go up to compensate. I'm not so sure there is a total gain.

 

King of Debt, spare us!
Your Hawaiian article is rubbish through and through. Stating evidence like the economy grew in the four years after the federal minimum wage was increased in 1997 is downright ignorant. We all know 1997-2001 were the tech boom years, creating a wealth effect in equities which led to more consumer spending.
The fact is, as much as it's natural to help teens and the disadvantaged, price and wage controls seriously hamper economic activity. They create distortions in the markets and lead to more drastic boom-bust cycles.
The market is where decisions about wages, prices and supplies should be made. I applaud Henry Ford. He made a great decision and didn't try to push it on others. HR is one of the greatest and most managable costs of business. His theory is very similar to landlords who make their rents lower than the competition in order to attract a wider pool of candidates and securing stable tenants. Wouldn't you rather have someone pay $1000x12 rather than $1200x3?
Rich Slick also is right. Income inflation is becoming the most pressing concern of the Fed. While price inflation is under control, productivity is slipping and average hourly earnings are on the rise. The unemployment rate is down to the lowest in decades. If that doesn't end, expect the Fed to hike Prime yet again.

 

Mrs. Ewer,

The article states that Wal-Mart is now backing a federal minimum wage increase. Wal-Mart obviously believes that a higher minimum wage will mean its customers can afford to shop and buy more from its stores.

Given the profit margin for companies like Wal-Mart it is doubtful you will see large price increases due to a minimum wage hike. These corporations can well afford to absorbe such an increase.

As for inflation - it is happening anyways. The costs of goods and services has risen while wages have stagnated. It can be argued that an indexed minimum wage could smooth out large increases and long periods of stagnation that we are currently experiencing.

- H.G.

 

Raising the federal minimum wage is unsettling to me, and here's why:

1) My first concern is for the wider economy - starting with small businesses (which employ around half of the US labor force)… forcing them to raise wages drives their costs up. Will this mean they have to let people go, and thus increase unemployment in order to hit the new minimum?

2) I hate it when government thinks they can do a better job than the market! It's been quite a while since we've seen a minimum wage increase... if we didn't have an arbitrary minimum, might wages naturally be higher?

I tend to prefer market forces. Do you think that people earning “minimum wage” need the government to negotiate new minimums on their behalf? I’ve earned minimum wage (and less) as a teenager. When I realized that I’d never earn more than the minimum at one job, I left and found one that would pay more. Market forces.

 

i like min. wage.

 

A majority of people won't get pay raises from a minimum wage increase, but will have to pay higher prices for goods and services. This will cause people to buy less because they can only afford less. Won't that cause the economy to worsen?
Macroeconomics is much more complicated than that, despite what the political spin might have you believe.

 

Hi Jeff,

You commented:
Besides, you have worked a couple minimum wage jobs and look at your net worth now... $418,628.25
It doesn't seemed to have hurt you much.

Not sure what you mean by that comment. Should I agree that past earnings do not dictate future accumulation?

To All,

I would never expect any minimum wage worker to continue to only earn minimum wage forever. It just raises the starting point. But if the starting point is so low how can a worker accumulate enough to ever hope to get ahead?

 

I'll make an analogy here. Suppose the government set the minimum price of automobiles at $20,000. Would anyone still buy the cheaper cars?

It is a liberal-socialist myth that raising the minimum wage helps anyone. It makes some people unemployable.

 

The answer to this question depends really if you are a saver or a spender of money.

If you are a spender, like the US government is, with tremendous debt you would want the wages increased. Even though the price of goods increases the value of the debt in terms of US currency decreases. If you spend way more than you make, effectively you are making more this way because you can use cheaper dollars to pay off your debt.

If you are a saver then you would want to limit artifical wage increases because this is one of a few factors that causes inflation which errodes the value of all the US monetary savings you have created. In essence it is like a stealth tax, not on just this year's income but your entire US monetary wealth.

If your savings are in assets like stocks, natural resources, real estate, etc. it should not matter as much because the value of these will factor in inflation. The value of these assets may suffer locally however if the companies you are invested in can not compete with lower labor costs or lower cost of supplies elsewhere. This could lead to your unemployment if companies pick up and move or at least a devaluing of your salary due to inflation.

Although wages have not been artificially increased for awhile the US government has been issuing more and more debt and the federal reserve has kept interest rates low, fueling inflation which can be seen in asset prices such as housing , metals and stocks. Although the government says inflation is under control it is because they look at only a certain basket of factors. I suspect artifical wage increases would cause the CPI to increase, justifying the Federal Reserve to increase interest rates if the government would let them. I feel the government has so much debt that they have to pressure the Federal Reserve to keep interest rates low otherwise they would not be able to meet interest payments with current tax revenue.

Either way, I suspect in a decade or so the government is going to default on its debt obligations or social security promises even if taxes were raised and the richest were removed of their wealth. This past year the government already had to increase the allowed debt limit.

Supposedly unemployment in the US is near all time lows. I know at the company I work at we have difficulty finding suitable people to fill our entry level $14/hr jobs with substantial health care and retirement benefits. It seems to me if people want such salaries they should get the skills or work ethic to obtain them.

Also I do not feel that creating a labor force of dependancy rather than competition is going to be good long term for the country. China has a tremendous amount of people doing a tremendous amount of work for much less. The quality of life is going to shift to over there unless US workers become more competitive. One could say that working conditions are not fair but life isn't. It is not about fantasy but reality. Eventually Chinese salaries will increase with the increase of wealth in their country.

How far low we go is really dependent on us.

 

The point about teenagers is that few workers are affected by the minimum wage and so raising the minimum is not going to hurt business. A very few people who really need help will get it. Half the workers in the country are in states with higher minima. Maybe 2% or so at most get the Federal minimum in those other states.

So I am in favor of raising the minimum. In both my intro and managerial economics courses I teach a section on imperfect labor markets where there are powerful employers and the theory and practice of the minimum wage.

 

I'm not necessarily against a minimum wage increase, but I don't think it will help minimum wage earning Americans as much as other social reforms in the government. Things like making sure every American is provided with healthcare, an acceptable standard of living upon retirement, and affordable higher education would likely be better places to put our resources. It's all well and good if minimum wage earners at Wal-mart are given a pay increase, but their standards of living will always be hampered by Wal-mart slashing at their other benefits like health care or pension. That being said, it's good to see that Americans in their election day propositions were thinking in a more socially conscious way by voting for minimum wage hikes as well as for Democrats.

 

I think raising the minimum wage is pointless. Just a political ploy. While they're at it, why not raise it to $50/hr and eliminate poverty overnight? Of course this wouldn't work and is silly, but serves to illustrate how flawed the whole concept is. Taking the argument to such an extreme shows how the logic breaks down. The fact it can be difficult to get by on minimum wage isn't because you're being paid only $5.15/hr, etc, it's because you're at the bottom of the scale, regardless of what the number is. There really is no reason anyone should be stuck making minimum wage for very long. It should be viewed as a mandatory civil service...you flip burgers for a while and then move up to bigger and better things!

 

I won't pretend to understand macro, but those who are merely subsisting sure seem like they would appreciate the wage increase and the opportunity to work to save instead of work to eat.

"'If the minimum wage had kept pace with inflation, it would be more like $9 right now. We've let the floor sink so low, it's historically less than we were paying back in the 1960s,' said Jen Kern, director of the Association of Community Organizations for Reform Now (ACORN), an advocacy group that has led the 'living-wage' movement." (Source: MSN Money)

 

3 words: IT'S ABOUT TIME!!

 

Folks could at least base their opinions on actual economic data. For everything you ever needed to know about the minimum wage, check out this handy guide:

http://www.epi.org/content.cfm/issueguides_minwage