The Minimum Wage – It's The Economy Stupid

Government continues to get bigger, and you believe the problem is getting worse. I'm not sure how the government is helping.

I think the correct statement would be that government continues to get bigger and is NOT helping. The point is that the government has neglected to raise the minimum wage for 16 years, and if killfile is correct in that the problem is getting worse, then wouldn't that logically lead to the conclusion that raising it would help?

I think that the 1.9 million is high. I found a recent reference to a figure of 520,000. The link was to a story in the Atlanta-Journal Constitution. Unfortunately, the story must have been moved and the link was dead. I will post the link if I can find the story.

Jon N wrote

With only 1.9 million on the federal minimum wage, it seems as if the problem is working itself out through the market.

Jay B. reports 520,000. Either way, if the number is trending down, there may be other market forces at work.

First we must take into account the number of people who choose not to work because it is less expensive not to work (i.e. A parent earning the federal minimum wage would barely earn enough after taxes to pay for childcare. Still others may have just given up on finding work because nothing they are qualified for pays enough to live on so they wind up on government support, family support, or the street.)

Next, what impact has outsourcing had on these types of jobs. Not all minimum wage positions are service sector, but manufacturing.

Then there are companies that are moving away from an hourly pay structure in favor of some other method of compensation.

Finally, how much under the table hiring goes on in the minimum wage arena?

With the possible exception of alternative compensation methods, each of these scenarios is bad news for the American workforce through lost income, bad news for tax payers because these people still have to be helped out, and really bad news for our economy because there could be a sizable number of people out there not spending discretionary income.

With only 1.9 million on the federal minimum wage

I'm not exactly clear on what this means. Does it mean that nationwide there are only 1.9 million people actually being paid the hourly figure that is the federal minimum wage? That number seems quite low to me, but even if it's the case, aren't we totally ignoring, then, the impact that the federal minimum wage has on most wages in general? State minimum wages which are higher than the federal one are generally tied to the federal one, no? And wages in general are tied to it really. For instance, in my home state (Connecticut), the minimum wage is $7.40/hr. A cashier job (the lowest-wage position) at CVS, though, pays $7.65/hr. Not because $7.65/hr is some magical number that exactly pinpoints the value of a cashier at CVS, but because the minimum wage + 25¢ is. Or at the company I work for: Clerks make the minimum wage, and assistant managers make $8.25/hr. Not because $8.25/hr is the right wage to pay assistant managers, but because the minimum wage + 85¢ is. That's what it's been for the entire time I've worked there. Even the pay for the managers gets bumped up as the minimum wage goes up every January.

There is a federal minumum wage, but the states have the ability to set higher minimums based on the cost of living and whatnot in that state. I don't know how many states have done so, but I think its fairly common.

That would account for the seemingly small number of FEDERAL minimum wage earners. The overall number of people earning a minimum wage somewhere must be quite a bit higher.

I'll look into that and see what I can find.

fair pay = more money to spend = better economy

Fair pay is not always equal to an imposed minimum wage.

you cant afford to live off minimum wage right now... but hey, republicans, we wont need to go around the globe to find a third world country anymore... we will be one!

So if we don't increase the minimum wage America will become a third world country?

If we increase the minimum wage America will become a third world country?

Yes i know cheap shot.

Killfile, the term Third World has no objective definition. Some use "third world" as you have, while others use it to label countries that are underdeveloped. The common practice today, is to use it based on the U.N. Human Development index, which would then include Russia as a thrid world country.

I believe what theIMPOSS1BLE meant was that we would be a country of poor, uneducated hungry people living in mud huts. But maybe I am wrong.

While the common practice today may be to equate the term Third World with the designations "Least Developed Country" (LDC) and "Highly Indebted Poor Country" (HIPC), Killfile is historically correct. The term "Third World" is a relic of the Cold War Era. The First World identified the United States and its Allies, the Second World identified the Soviet Union and its allies, and the Third World identified every other world state; technically, Switzerland was a Third World country.

The Human Development Index ranks countries based upon their standard of living rather than according to other economic indicators (including efficinecy, productivity, or competitiveness) on a scale of 0.00 to 1.00. I don't understand your connection between this index and the term "Third World" unless you are simply commenting on the tendency to incorrectly conflate economic designations with antiquated political classifications.

Killfile is historically correct.

I could care less if Killfile is historically correct. What I was talking about is what the general meaning is today when a person refers to a country as "third world."

Here is a great example of what I am talking about, Courts:

Third world: The poorest nations of the world. Most third world nations are in debt to Western banks and governments or international lending organizations. Many depend on international aid to meet the basic needs of their population.

I could care less

Grrr…

I realize that there is logic in this argument about the need for an increase in the min wage, I just have not found it yet. How does the logic of give people more money for doing the same thing, create anything but a feeling of entitlement. Not counting that the prices for goods and services will elevate to off set the cost of raising min wage. Does this not create a wash?
The great thing about the market system is that people get to choose, I realize that that is a novel concept, but if you don't like the way a company treats there employees, then go else where. Where is it written that you must be loyal to people you don't like? Take your money and go to a place that treats there employees well. Example: Starbucks just increased there min wage, all on there own, they did not need the Gmen to come in and tell them to give people more $. They even scrapped a managers meeting to save the money to do that. That is very cool. I know, but they are big and can afford it. I own a small business, just my family, but when we do hire, it also will be above the min wage, if, it is a person worth keeping around, I will need to pay more. Again, my choice. Aren't we a country of freedom of choice?!

KyleN, a market failure is not the same thing as a public good (for a very detailed analysis of these [political] economic concepts, I recommend Kuttner's "Everything For Sale: The Virtues and Limits of Markets" and Todd Sandler's "Global Collective Action.") A technical mistake, perhaps, but a key one nonetheless (and one that Killfile should have known better than to make).

A public good (generally provided to the commons by a government entity and funded through tax dollars) may be established as a solution to a market failure but may also be provided as part of a larger project. For example, public education responds to a market failure to provide affordable education to -=all=- students. On the other hand, national defense is a public good that is not desgined to address a particular market failure. To conflate the two terms is, however, wholly incorrect.

Courts:
You are correct they aren't the same thing one is a common solution to the other. However I disagree in that there exists a public good to which there is no belief in a market failure.

Public defense is a market failure addressed by a public good. The failure is due to the free rider problem. Everybody assigns utility to their defense however the defense provided by or for their neighbor will also protect them, and at no cost. The economic choice then is to pay nothing and enjoy your neighbors defense. I could use Europe as an example but that gets too emotional sometimes :)

I don't yet know Todd Sandler's work but Kuttner makes the mistake of ignoring the foundation of a capitalist system which is private property rights. The scenarios he refers to as limitations of the market system are explained by an unequal enforcement or understanding of private property rights.

I am not a blind believer in the sanctity of the free market. There is one, very big, problem with free markets. The assumption of perfect information. However the remedies I would recommend to policy makers is to tackle the actual failing, the lack of information. Remedies that try and alter outcomes and not address the cause are not likely to be efficient and are fairly likely to be harmful by creating further distortions. Governments role in the market is to protect (not provide, you can't provide rights) private property rights, and facilitate the flow of information.

Minimum wage is a solution in search of a problem. In the end it will find one, even if it has to create it first. Minimum wage policies impede the flow of information in the market by disallowing the measurement of marginal value work.

Killfile:

It's not about a judgment of efficiency or effectiveness, but about the public good of having a full day's work count for something.

That is exactly what minimum wage laws prevent the market from doing, having a full days work count for something. If you make minimum wage how much is a full day's work worth? You can't be sure, maybe it was worth it maybe it wasn't. There is a disconnect between work and pay with all the implications thereof.

There is a weak (IMO) public good in minimum wage but it has nothing to do with an individuals feelings of worth which are after all only important to the individual. The possible public good is if you believe that people who find minimum wage work worth their time and effort but lack skills to actually be valued there. If they don't get the inflated value they will instead turn to crime or public largess to survive instead of trying to better themselves. I am enough of an optimist and believer in human nature to think that is an insignificant number of people, that nearly everybody wants to do better and be more and given the information they need to that they will. I don't think we need to trick people into keeping busy to keep them out of trouble.

KyleN, As long as we need people to do low wage work, we will have low wage workers. It's not an issue of people "bettering themselves." Take for example, people who work in nursing homes and take care of our elderly. They don't get paid much, but they do a very important job and deserve to make a decent living wage. Just because it's low wage work doesn't make it unfulfilling or unimportant at all.

I have every respect for people who do jobs like that, and I think that if someone is well-suited to doing that sort of work, they shouldn't have to feel the pressure to move into a different field just to be self-sufficient.

I don't agree with your basic premise though it's one I hear often. People, work, utility is not all in a vacuum they are interrelated. There is no need for people to do low wage work, there is only work which is not valued highly today. If only 10 people in New York will clean up trash from the streets and everybody MUST have the trash cleaned (value that service highly) those people will make a fortune. And yet they will be doing unskilled work.

There are two courses of action for a person in a low wage job to change their circumstance. Either change jobs to doing work that is valued higher or convince people the work you do should be valued higher. The third option to me shouldn't be an option, use the government to steal somebody else's money to make up for the fact your work isn't valued higher.

For the example of nursing home staff, if we (as a society) do not value that assistance greatly it will be paid poorly.

Wages aren't set by committee (yet) and a freely set wage can't be unfair by definition. There can be arguments over what constitutes freely but two people making an agreement without duress can't be unfair. In a fixed wage economy where government sets the price of labor then it's possible to have an unfair wage. When government sets a floor price for labor you can have an unfair wage.

A fair action isn't always just because laws aren't always fair. All other meanings though I think just = fair and fair = just. That is my simple answer :)

From Princton
Adjective

* S: (adj) just (used especially of what is legally or ethically right or proper or fitting) "a just and lasting peace"- A.Lincoln; "a kind and just man"; "a just reward"; "his just inheritance"
* S: (adj) equitable, just (implying justice dictated by reason, conscience, and a natural sense of what is fair to all) "equitable treatment of all citizens"; "an equitable distribution of gifts among the children"
* S: (adj) fair, just (free from favoritism or self-interest or bias or deception; or conforming with established standards or rules) "a fair referee"; "fair deal"; "on a fair footing"; "a fair fight"; "by fair means or foul"
* S: (adj) good, just, upright (of moral excellence) "a genuinely good person"; "a just cause"; "an upright and respectable man"

The first meaning against the law is what I said first. If the law is unfair, then an action can be unjust and fair both. If the law is fair, then a fair action will always be legal and thus just. Ethics if applied to the parties involved only is the same meaning as fair, if applied to everybody not just those involved it could be seen as unethical and thus unjust while being fair the last point I make illustrates this but I don't see it as relevant to minimum wage.

The second definition is debatable along the terms of reason and conscience being possibly reducing factors to somebodies ability to choose freely. That however is addressed already by stating it would have to be a freely entered contract.

The last meaning is ambiguous because it relies on an individual value judgment that could possibly be third party. An example I can think of along these lines is prostitution in Las Vegas. It's legal, two parties freely enter the transaction, and yet many people could claim it's unjust by reason of being immoral (or unethical). I don't really see a good tie-in to minimum wage along those lines though.

The Adverb section I didn't copy, doesn't apply in this context.

I also contend that the minimum wage is racist. Who are the people, in general, with less education and fewer marketable skills? Immigrants and minorities.

For a real life example look at post-Katrina construction and rebuilding efforts. By federal law the contractors were required to pay prevailing wages, creating an artificial floor for wages. The contractors thus hired and brought in their own employees from all over the United States. That was nice, except thousands of Katrina survivors were left without a job, because they were not worth the artificially high wage. If this law was not in affect and there market set the wages, contractors would have hired thousands of those Katrina survivors to work to rebuild. The wages would have been lower than normal, but they would still be far higher than no employment at all.

The prevailing wage in Louisiana is so low, that I don't think that can account for brought-in labor. If I remember correctly, the prevailing for an electrician was about 14 & a half dollars/hr, for example. How much less could one possu=ible pay an electrician and still feel confident switching on the lights?

An electrician is not an unskilled laborer. I am talking just straight construction, hitting a nail with a hammer, or maybe a nail gun. I wonder how many local residents would have jumped at the chance to do some construction at say $8 an hour, when instead contractors decided to bring in their own men since they were forced to pay the prevailing (pre-Katrina) wage of $12?

Except the part where we want people to work for a living instead of living on government handouts or just starving to death.

They may not be living off of government handouts, but they are living off of government-forced handouts. They are making more than their work is worth. That is a handout. The minimum wage is basically one of the largest unfunded mandates. It is welfare. It is just a new tricky welfare that doesn't require a direct tax.

We value people earning what their work and personal responsibility is worth. My pay is earned and not a reward, why should some unskilled person get rewarded for being unskilled?

Unskilled work is often hard labor, my friend. As the joke goes:

Employer: Can you push a broom?

Applicant: sir, I have a Master's degree!

Employer: In that case, we'll show you how.

It's also a form of "welfare" that rewards work and personal responsibility.

Minimum wage has nothing to do with personal responsibility. If a person exercised personal responsibility, they would not have to rely on government mandated wages for their survival. They would have already taken control of their life and learned skill sets necessary to meet daily needs.

If a person made poor choices and decided to exercise personal responsibility, they would take control of their current situation and find ways to learn marketable skills and earn a living without the government minimum wages.

Personal responsibility stops at the person, not at the government.

They should be rewarded with the value they provide, and nothing more.

Danny Noonan: I've always wanted to go to college.
Judge Smails: Well, the world needs ditch diggers, too.
Lacey Underall: [to Danny] Nice try.

I don't believe that there is a permanent underclass of people. I do believe that there are people willing to do whatever it takes to better there lives.
I have witnessed 1 lady that is my customer overcome great odds. She is a mother of 3, her husband was a contruction worker, and she was a waitress. She put her self through vet tech training and is now working a better job. All of this while nursing a son that has some crazy health problems and a husband that killed his self. If anybody has a need or feeling of entitlement it should be her, but she did not complain, she worked and is bettering hers and her childrens life. Why can't other people have the same resolve? Why is she special?

My pay is earned and not a reward, why should some unskilled person get rewarded for being unskilled?

You earn your pay but your employer rewards you for your hard work. They see that you've earned it and set forth to reward you for it. So, "earned" and "reward" are very visible in monetary reimbursement.

who would flip the burgers, mop the floors, and clean out the barn?

Teenagers who are doing it now, that's who.

How's the weather over there in Utopia?

Sunny, duh!

I would love it if the GOP were to attach an amendment to the next Min Wage hike that would make it illegal to tie union contracts to the minimum wage. I wonder just how many Democrats would support that bill now that their union lobbyists buddies stop backing it.

There's an idea. Sponsor a bill to double the minimum wage and attach that restriction to the bill. There would be no support for that. The political influnence of the unions who benefit from the minimum wage is far greater than those who actually earn it!

Jay, an example please?

Wikipedia

Some labor union contracts are based on the minimum wage; this produces a natural constituency to lobby for increases among union workers who typically earn far more than the minimum. Some public grants or taxes are also based on a multiple of the minimum wage, and this also can produce lobbying incentives in either direction. (For example, a worker may have an exemption if his earnings are below 2.5 times the minimum wage.)

Illinois Business Journal

"Where minimum wage does have an impact is with union contracts that are based on minimum wage," Blankenship said. "There are union contracts where they tie the wage scale to a percentage of the minimum wage. For example, it might be an entry-level position, maybe 115 percent, 120 percent or 200 percent of the minimum wage, so if you hike the minimum wage, you're basically raising the scale for a lot of union workers - and that is one of the reasons why politicians continue to go back to the well on that particular issue. It's a way of buying off union support. That's something that not a lot of people bring up, but I'm always quick to do that."

Those aren't examples - & Wikipedia by itself is never, ever a source IMO.

I was looking for examples for you, and found something interesting:

This shift from goods-producing to service producing work has also meant a decline in workers paid on an hourly basis. Today, approximately 60% of workers are hourly employees, a decline from the late 1960s. Finally, a smaller and smaller percentage of workers are receiving minimum wage. In 1979, 13.4% of all hourly workers were paid at or below minimum wage. That percentage has steadily declined since. In 2004, only 2.7% of hourly workers received minimum wage or less.
.....
The most startling finding of the report is that the largest negative effects of a minimum wage increase are felt by minimum wage workers. At the time of an increase, if a minimum wage worker is working part time, they are more likely to be laid off than someone working full time.
.....
Additionally, the lagged impacts for these workers are often a significant reduction in hours. After companies eliminate part-time positions in an attempt to reduce labor costs, if that attempt is unsuccessful, the next step is to often reduce the number of hours remaining hourly workers are scheduled. This "trickle-up" effect then requires salaried employees to make up the difference. In the fast food restaurant example, this means that a shift manager or swing manager, often earning a salary equivalent to $7.00 to $9.00 an hour, is working longer hours. As a salaried employee, this manager is not eligible for over-time pay, thus longer hours effectively reduce that employee's wage rate.
.....
Finally, a surprising trend was revealed when researchers examined the impact of a minimum wage increase in states with high union representation. The impacts on union workers in the lowest-wage category are significantly different that those of non-union workers in the same wage category. Union workers see wage gains double that of non-union workers, suggesting that union contracts are written to adjust with any minimum wage increase. Union workers in the lowest wage category also see their hours worked increase as well as the possibility of overtime, while non-union workers are more likely to see their hours reduced. Finally, union workers in the lowest wage category are more likely to retain their jobs than non-union workers after a minimum wage increase, again suggesting that contract preclude lay-offs to reduce labor costs. The researchers also suggest there is evidence of "substitution" in favor of union workers after a rate increase, meaning that companies will eliminate low-skilled minimum wage non-union employees and replace them with union members that can perform more complex tasks. Bottom line, the researchers conclude, it is union workers with wage rates 1.2 to 1.5 times minimum wage ($6.18 to $7.73 an hour)that benefit the most from minimum wage rate increases.

(source)

Good find. I was having trouble finding good sources. It is not like the AFL-CIO or UAW publishes the terms of their contracts for public perusal...

Thank you, Brian! Jay, I think Brian's source actually makes the case for unionization. How on earth can you beat on people's earning going up from $6.18 to $7.73? As Barbara Ehrenreich's book "Nickled and Dimed" points out, there are far more low-wage than minimum wage workers. It's hard to get by even on $10/hr. I'm not so sure that the minimum wage is the biggest problem our economy faces.

Vincent Grayson writes:

They should be rewarded with the value they provide, and nothing more.

Really? Plenty of people are paid more than their work is "worth" - how else can you explain the whole real estate industry, which is propped up by state regulations limiting competitive pricing that ought to appall the usual gang of anti-trade-unionists? - - or the college grad (barely) ne'er do well "working" in the family business?

Why are surgeons & specialists who treat difficult illnesses paid more than the primary care doctors & nurse practicioners who prevent illness - and hold down health expenses for that fact?

Value is pretty elusive and subjective. But the well-connected seem to make sure that those down the ladder are paid "no more than " - blah, blah, blah....

Certainly, there are exceptions to the way things should normally work, but I hardly think nepotism is the rule, rather than the rare exception.

As for surgeons making more than preventive care doctors, the answer is simple, people tend to prefer and value results now rather than later.

People are, in general, going to value the guy who saves their life today by performing a bypass, than the guy who they visited once every few years for the last 20, that told them to eat healthier.

Cynic that I am, I am inclined that privilege is a rule unto itself. As long as universities continue "legacy" admissions, aka affirmative action for the loaded, and a diploma from the "right" university allows one to cut in line, the concept of worth will be skewed. The worth of corporate jobs is in part just this: Rich people like paying one another well, and stiffing everybody else. The Walton family being a case in point.

Damn it Adam. Almost every time I read something like this, you have already come along and posted what I wanted to post.

(Sigh...)

Great point by the way.

Hey - if that solves the market problems I'm all for it, but let's not pretend it's not going to drive all kinds of prices up.

This is why we need to allow the privatization the guest worker program to make it more efficient. Many of the illegal immigrants are only coming over because they simply want to work. This will lower illegal immigration, lower "border security" costs, and keep prices down.

That will probably require a tax hike to pay for.

Why not take it from other bloated and unneeded government areas.

And get real... you want a 30 something who's struggling to even pay the bills to somehow magically acquire some new skillset?

No, I want them to acquire skills when the 200+ million other Americans did, in their teens and early 20s.

I'm assuming you're in favor of job retraining programs, federal entitlement programs to support people and their families while they retrain, and other systems to allow people to take a year or so out of the workforce to make a better life for themselves?

I'm for none of that. Sometimes their are consequences for poor decisions early in life. Crappy pay and long hours is one of them.

Then they can reap what they've sown and work long hours at @!$%#ty jobs for low pay, as that's all they're worth. Maybe that sucks, but sometimes, life sucks, and I don't feel like the government should be mandating that people who don't bother to acquire skills in the system we all pay for, should continue to be propped up on everyone else's dollar.

This past election, voters in my state, Missouri, voted to raise the state minimum wage to $6.50/hr. I voted against it because I don't believe in minimum wages being dictated by any government, local, state or federal.

Now the Democrats want to raise the minimum wage higher, and I want to know this: what do they base their reasoning on to raise the minimum wage in Missouri? Have there been studies done on my state that show a need for a higher minimum wage?

No, they answer this non-issue with a universal standard, based on nothing.

There should be no minimum wage. The government has no right given to them in the constitution to interfere in private businesses in this manner. It is nothing more that the continued socialization of America and the reinforcement of the belief that the American citizens is better off relying on the government to take care of him rather than taking care of himself.

That said, living on $5.15 an hour would be impossible here

And yet somehow people survive on $5.15 an hour all over the nation.

But you still don't hit on my main point that ignoring what the federal min wage is or will be, is it a good idea to make it a federal min wage when prices and costs of living vary so much from place to place?

That said, living on $5.15 an hour would be impossible here without federal assistance

Really...

What about church sponsored food banks? What about private charities on the local and state level? What about family and friends? What about programs that teach skills and pay for work completed, followed by job placement? These programs exist, and can be done without government assistance.

Not many people, Killfile, live on minimum wage. The majority of people on minimum wage are below 25. They are not scraping by to make ends meet. They are flipping burgers for gas and beer money. And if you do get a minimum wage job and keep it, your wages usually increase within the first six months.

Let the local economies dictate the wages, not some east coast socialist think-tank with no concept of middle America economics.

Ooooooh, Bodhi, you used the word socialist, still a surefire way to turn up the heat in American discourse. Our interstate highway system is socialist, IMO. Taxpayers fund it with no relation to the benefit they get from it. In fact the building of new exits which the benficiary community probably did not pay, or at least pay full price for (I had trouble finding figures), drains business from central cities.

It's only socialism when you don't like it's effect - eh?

Our interstate highway system is socialist, IMO

What's your point? Our interstate highway system is the single greatest factor leading to both our dependence on foreign oil and our production of "greenhouse gases". It is the perfect example of the government giving us something that we never really wanted, but that would cause untold problems years down the road [pun intended]. Not the greatest example...

There is one benefit that everyone in the country gets from the Interstate Highway System: Defense.

Military benefits of a highway system can be seen dating back to the Roman system of roads and possibly further, although it was a lesson directly learned from Germany.

So while the civilian benefits of a highway system may seem socialist to you, no country, regardless of government type, should be without one.

There were military benefits to the Romans because they fought land battles with their neighbors. That seems a lot less relevant to the US. It seems even less relevant since we've had coast to coast rail service for a heck of a lot longer than we have had coast to coast highways.

In the event of a soviet land invasion. Right. Once again, I don't see how it contributes to our defense. Me in particular, I'm 99.9% sure that I'll be blown up immediately in any nuclear attack (drive thru DC twice a day) so I don't really care that much what happens next. But events from Katrina point to significant problems with using the highway system as an emergency evacuation route.

Inhalant Ab, I stand corrected to an extent. I really had forgotten that the original name of rthe Interstate system had the word "Defense" in it. Nonetheless, the building of exits is very much about butter, not guns. Make that pork.

But events from Katrina point to significant problems with using the highway system as an emergency evacuation route.

I don't think you'll find anyone that will argue that a lack of a highway system would have made Katrina evacuations better.

Hobson,

my point was that the word "socialism" is one of the most loaded in American discourse & is used quite selectively. If you saw a defense or approval of the Interstate system in my comment, you're not paying attention.

I'm looking at one of those "Your Rights" posters that employers have to keep posted somewhere and I see no such exemption.

Also, what is the definition of "smallest businesses"? A small town grocery store that employees a few cashiers and baggers probably is not exempt, yet it is a small business that will be hurt by a min wage increase. Min wage affects small businesses because they are the ones that are employing unskilled labor. Most large corporation have outsourced their unskilled labor long ago.

Oh, wait, there is another negative of min wage laws, businesses will just outsource the labor. There are already experimetns with remote drive-thru service. Hike the min wage and soon our burger flippers will be located in India as well. Of course what cannot be outsourced can always be automatized. Anyone notice self-checkout lines appearing more and more at super markets and retailers?

I'm embarrassed for you Adam. This from Dept of Labor's Q & A on the FLSA, wherein is the minimum wage provision:

To whom does the minimum wage apply?

The minimum wage law (the FLSA) applies to employees of enterprises that do at least $500,000 in business a year. It also applies to employees of smaller firms if the employees are engaged in interstate commerce or in the production of goods for commerce, such as employees who work in transportation or communications or who regularly use the mails or telephones for interstate communications. It also applies to employees of federal, state or local government agencies, hospitals and schools, and it generally applies to domestic workers.

As to self-servce, etc. are you making a case for make-work?

miss j, I feel embarrassed for you.

Do you realize that that $500,000 cut off is for revenue not profit. Almost any small retail establishment even if it employees just one clerk will have exceed that limit! Also if your distributor happens to be out of state, which almost 95% will be, you'll be using the telephones for interstate communications!

I dunno, the Cinnabon I worked at for my first job definitely didn't do $500k in business a year...but then, I suppose that's why they're not around anymore.

Hobson, only that employee doing interstate work regularly is subject to such. Let's say the owner is the only person doing the interstate gig, say purchase orders for a small store. None of her employees would be subject to FSLA. Obviously, the revenue cutoff ought to adjust annually, which I don't believe it does. So, dear, I wasn't wrong, was I?

My point is don't assume - you could have looked this up yourself.

On the other subject of call centers processing drive-thru orders - it actually makes massive sense. It may take 30 seconds to take an order, but 2 minutes to put it together. It would make sense to have one order taker for every 4 cashiers. Then consider the time zone difference - the call center order taker would basically handle a rolling lunch hour. Also, the harried cashier is unlikely to relish "upselling" because it makes more work for him. So, the use of call center order taking eves out the work flow. I think it's actually quite elegant.

Anyone notice self-checkout lines appearing more and more at super markets and retailers?

Definitely. I have asked a couple of times in minimum wage discussions on Newsvine how supporters of the minimum wage feel about the automation of jobs that had previously been done by people, and nobody seemed to have a problem with it. I was surprised by that. They support the minimum wage to help unskilled workers scrape by, but don't care when positions are replaced by machines. I don't see how that adds up.

Good point Brian. I'll hazard a guess that the call center operators are getting better than minimum - they are a good return on investment. You bring up a question that has lingered since the first Industrial Revolution. Wither all the switchboard operators? Elevator operators? Would bringing them back amount to make-work?

Sometimes automation replaces truly tedious work. Much automation replaces not unskilled labor, but skilled - robotics in auto factories for instance. Some automation improves safety by reducing human error.

And yet, the loss of human contact in some cases seems not worth it to me. I still like to cash my check with a bank teller. I prefer when a person answers a phone instead of being sent through an increasingly maze-like automated system.

Here's a few questions, and believe me I do not have the answers:
How many jobs are created by the designing, bulding, operating, and maintaining of automation in its many forms? Do they more than replace those lost through automation? Have we reached the limit of the benefits of automation? Will America always have more jobs than working-age people?

I actually prefer to rent movies from Redbox than Blockbuster, and to deal with an ATM rather than a bank teller. I like to have grocery clerks though, since I don't want to look up codes for my produce.

I like to have grocery clerks though, since I don't want to look up codes for my produce.

As a former supermarket cashier, I like to use the self-checkout because I know the codes better than most of the cashiers anyway.

Side question: Are those codes an industry standard or up to the grocery store chain?

It might be worth memorizing a few if it were the former.

Industry standard for the most part. They are the grocery equivalent of UPC codes.

Hmm. Do you think you could get away with ringing up all your produce incorrectly as something cheap?

Don't drag Marx into it... it's remarkably plain that you don't know what you're talking about. If you must quote Marx do yourself the favor of quoting Das Kapital. That's the real meat of the theory. The Manifesto is little more than the cliffs notes on the abridged version for Reader's Digest subscribers with ADD. Something gets lost in the translation.

This was quite a 'high & mighty' response if I may say so. Bodhi1 did not say he was an expert on Marx, yet you attack him for his lack of knowledge on what you assume he thinks he is an expert on.

I can fully understand, as I have the same problems with people who think capitalism is bad simply because of the twisted American capitalism we find ourselves with today.

Killfile, there is no need to apologize. When I comment on your articles, I expect pretentious, high-handed responses from your self-inflated ego. I get them most times from you. So, no worries. I saw it coming. Even if I don't know what I'm talking about here.

My point was, btw, if I may be so bold as to explain my comment from Ignorance Isle, is that minimum wages says, "Give us what you can, and we'll give you what you need, even if you have not earned it or produced enough to make up the difference."

I think (and I know, dumb as a post, right) they match up fairly well. We'll give you what you need, regardless if you have earned it.

The price of non-labor intensive products does not. Your McDonald's sausage biscuit has a major labor component. A gallon of milk at the grocery store has a much smaller labor component.

You're only thinking of the front line people that make the item. Wages rise across the board.

The gallon of milk is a bad example as well. The milking of the cow may be more automated than it was before (do you think this is because it is cheaper to have a machine than a worker and that minimum wages played a part?) but the delivery of the milk by truck will go up (think about all the people in the trucking chain), bottling of the milk will go up (even though much of this will be automated ... perhaps a minimum wage had something to do with that too), the packaging of the mile will go up, the cost of delivering it to the store will go up, the cost of stocking the milk in the store will go up, and we haven't even talked about the manufacturing of the plastic gallon jug, the labels, and the marketing of the end product.

Wages will rise across the board and so will prices.

WAA SAUSAGE MCMUFFINS WAAAA

I think a higher minimum wage makes that possible and I don't mind pricing some teens out of the market place to do it.

His point though is what happens to those teens next. They graduate and become unemployed teens with no past work experience or ethic. That ethic part may be far more important than we all thing, but since that is non-quantifiable we can ignore it for now. Without work experience, who is going to higher them at the new high min wage? They have no history of reliability. Ask any career counselor, even a job working a cash register is far far better on a resume than absolutely nothing.

I think you also overestimate how much employees value age over youth. Even at a much higher wage, if you are an employer and need to hire a store clerk and given a choice between an 18yo with straight A's with a bright future, or even a solid B student and a 30 year old who still has no skills, who exactly are you going to choose? The kid with upside or the proven loser?

I think there is some intrinsic virtue in being able to work a full day, even if it is at some crappy job you hate, and know that you've earned your living.

That might be a nice feeling, but if too many people are satisfied with just getting by and quite a few will be, they will never have any incentive to improve their lives. They will be a permanent min wage worker. Right now, the average min wage worker does not stay at min wage for long. They move on to bigger and better, well relatively bigger and better.

Side question: Is "proven" a word? My firefox spell checker seems to be just fine with it, but the newsvine spell checker hates it.

Before, I go into the issues you and Adam got into, there is a vital point I should make:

I think there is some intrinsic virtue in being able to work a full day

This statement is internally contradictory. An intrinsic value would be something that is valuable regardless of who is there to evaluate it. However, no such things exist. All value is subjective, and this goes to the heart of many disagreements between proponents of market economics and their detractors. Economics tells us what a market economy will do. Some people dislike these outcomes and try to make something else happen. Unfortunately for these social engineers, the market is a dynamic system and it responds to intervention -- often by creating new side effects that are even more undesirable than the original concern. You can attempt to impose your values on the market but you cannot repeal the market process itself.

For example, raising the minimum wage will have some undesirable impacts that offset its benefits. The trade that we've now focused on is that a minimum wage tends to aid some adults at the expense of increasing youth unemployment.

there's no reason and no economic data to support the idea that a higher minimum wage would make more graduating teens lazy or unmotivated.

Actually, the single greatest determinant of income in our society is the amount of time that someone has been in the workforce. Those who get a late start due to the youth unemployment effect of a minimum wage are likely to have lower wages than other people who are the same age for the rest of their lives. That's the irony of this policy. The young people unemployed by the minimum wage grow up to be the struggling poor adults that demand a further increase in the minimum wage. This is a terrible cycle to put society into.

Now, you're probably wondering . . . do I have a better idea?

I'm certain that I can come up with a less disruptive policy to achieve the ends you seek. First, though, I need you to be clear about what your ends are. What are you trying to achieve with a higher minimum wage?

(As an aside: I've noticed that a lot of economic policy discussions concern means rather than ends. We are often inferring a person's ends based on their choice of means. In the most extreme cases this leads vicious slurs where people ascribe all sorts of evil motives to their ideological opponents. My question above is not intended to draw you out for a "gotcha" -- instead I suspect that the minimum wage is not the right tool for the job you want done.)

Why would it be logical to allow everywhere but the lowest cost area of the nation to set their own minimum wage laws? Also I would be surprised if the current federal minimum wage does not meet this requirement. There are some pretty cheap places to live across the South/South Central regions of the country.

While I would very likely never support a minimum wage, I would oppose a federal ban on minimum wage. States or local areas should make social policies and bear the cost for them as well. I would strenuously oppose minimum wage where I live but I will not tell people elsewhere they can't ruin their economic prospects, let them test it themselves.

Take the lowest cost of living in the country if you want to, work out a living wage for that area and make that the minimum wage.

What if that $5.15 per hour is already greater? I think the question that is never asked but has so much to do with min wage is what exactly is a living wage?

Glad you asked, so here is your answer.

The term "living wage" is used by advocates to refer to the minimum hourly wage necessary for a person to achieve some specific standard of living. In the context of developed countries such as the United Kingdom or Switzerland, this standard generally means that a person working forty hours a week, with no additional income, should be able to afford a specified quality or quantity of housing, food, utilities, transport, health care, and recreation. This concept differs from the minimum wage in that the latter is set by law and may fail to meet the requirements of a living wage.

Don't confuse the two, Living Wage does not equal Minimum Wage.

I'm not confusing the two, it is certain Democrats and liberals who complain that the minimum wage is not a "living wage" who do so.

I was reading another article on minimum wage hikes which brought up the opposite side of globalization.

Agriculture is pinched because sellers can't raise prices, set on global markets, when labor costs go up.

That's a real problem. If you're producing something whose price is set on the global market, what do you do when labor costs in your production area go up by 30%? What can you do that's legal, I don't know. But I do see the huge market incentive that suddenly appears here for using migrant illegal labor.

Um, many of those jobs have already left. They haven't all left. Bumping up wages here again seems sure to move more of them overseas.

goodwill that Dell lost

I don't think that I would call that goodwill. Dell damaged its reputation by providing poor customer service via its outsourced call center.

Why do you say that? Teenagers don't get a vote. And there already lots of restrictions on teen labor in our laws.

Some teenagers need to work to live.

Killfile - so you actually want teenagers to be there distorting the market downwards?

JimmyP - those aren't the ones Killfile is speaking of as distorting the market.

BTW, my ass was not parked in a cubicle when I wrote this. I wasn't at work.l

So once again, why not do that Killfile?

Kill, I suppose I was referring to the jobs that have already gone, the loss of our manufacturing economy.

Can there be any doubt that a labour market without the influence of government and/or organized labour to push up wages results in a stifled, inequitable, and essentially non-capitalist economy.

Yes there certainly can. http://www.classbrain.com/art_cr/publish/somalia_economy.shtml

I wouldn't have liked living in the anarchy of Somalia, but their economy seemed to chug along without government intervention

You've invested time and money in developing resources that they have not, and as such, you get appropriately compensated.

Pay isn't about who works harder, it is about how much value you add to your employer.

A person walking 5 miles in an hour to deliver a package worked harder, but a person who drove five miles in ten minutes was far more valuable. Who would I rather higher, the guy working harder but delivering only 8 packages a day at $6 an hour or the guy with the skills to drive and who can deliver 40 packages a day at $15 an hour?

It is also part supply and demand. Anyone can be an unskilled worker, and thus an extreme practically-infinite supply. However, people will college degrees within a specific subject have a much much lower supply.

What's the moral of the story? Find a skill that puts you in high demand where there is short supply and work harder at being more valuable, not actually working harder.

What kind of job is really warrants 10 times as much compensation as a minimum wage job?

The kind that 1/10th or more realistically 1/100,000 of people can perform. Wages and prices are about scarcity more than effort. If cleaning a toilet or a floor was a task 1 in 10,000 people could perform correctly then it would be well compensated.

The CEO's office suffers from the armchair coach syndrome, many people know they could do it, or do it better but in reality very few could come remotely close.

Wages like prices (they after all are the same thing) reflect the value placed on the labor of the person doing the work. An economic system is simply a mask or process by which many individuals can agree amongst themselves what value they place in things including their labor and the labor of others. Government policies that affect values are saying in essence that people involved in a transaction are incapable of valuing it themselves and require an outside party to value it for them.

Vincent: My exact point was that my "invested time and money in developing resources" led me to higher understanding of the world around me, and let me have an intellectually stimulating, secure, comfortable job. Why should it have to be a monetary compensation?

Kyle: "What kind of job is really warrants 10 times as much compensation as a minimum wage job?
The kind that 1/10th or more realistically 1/100,000 of people can perform" I vote then that all juggling unicyclists ought to be compensated $120000 per year.

Adam: "Pay isn't about who works harder, it is about how much value you add to your employer." I agree with this statement, but I don't agree that any one person can add 10x the amount of value, unless that person is a miracle worker.

I take it that all you anti-minimum wage, supply and demand advocates are all for outsourcing, and child labor, correct? After all, why pay a guy minimum wage when you could pay a mongolian child a tenth of that. They are unskilled and they accepted the wage, and perform an task that is in near-infinite supply.

If we all couldn't get enough of juggling unicyclists then sure :) I though think it doesn't sound very interesting to see. However when my company was between CEOs it was rough, and when they got a new one it was an obvious difference throughout the company, a positive difference. One man (in this case) made way more than 10 times the difference of anybody else by managing how the other 300 of us worked together harmoniously.

I am actually all for outsourcing and free trade, it's the free market charity program that puts U.N. handouts and IMF loans to shame. Produces real jobs, and helps lift entire countries standards of living out of the middle ages. Free trade to Europe, Australia, Japan are all mutually beneficial, free trade to developing countries is mainly beneficial to the developing country despite the propaganda on either side about how great it is for the U.S. or bad for the developing country. Companies hire cheap labor, that labor gets more productive and standards of living increase over subsistence farming and the next generation is more educated and does even better starting the whole cycle of increase.

Western countries (and myself) feel that children are not capable of entering into a contract freely because of issues with their understanding of the contract itself. What constitutes a child is a bit more ambiguous but generally late teens age. I think it varies by person, some at 13 seem mature some at 40 have yet to mentally develop but a mean is likely between 17-21. Nice cheap shot though it truly becomes your side of the argument :)

I agree with this statement, but I don't agree that any one person can add 10x the amount of value, unless that person is a miracle worker.

Think of a factory of 100 workers with 1 manager. Each worker can affect their 1% of the total output by 100%. So at most they can affect 1% of the output. The manager on the other hand probably can't affect the total output by 100%, but 10% is very reasonable through different managing techniques and employee motivation or making something more efficient. He thus affects 10% of 100% of the output for a total effectiveness of 10% or 10x great than the worker can.

Each worker can affect more than 1% of the output. Their behavior could negatively impact 9 other workers, leading to a decrease of 10%.

Should we then say that CEOs should only get paid 10x that of a worker only if they have proven to increase productivity by at least 10x that of the worker?

Sure, only if we can pay a worker only based on what they improved productivity by and scrap the min wage.