In two so-called "red" states that favored George W. Bush on November 2, voters also overwhelmingly approved ballot measures to raise the minimum wage by one dollar, to $6.15 an hour.
Kerry might have taken more votes away from Bush in Florida if he had embraced the minimum-wage campaign, as many labor and progressive activists urged him to do. But he inexplicably ignored the issue. It is imperative that Democrats and progressives start a nationwide debate that frames economic justice as a moral issue. Not only would this be the right thing to do. It would seem to be a winning electoral issue.
Out of sheer curiosity, does your demagogy possess the absolute power to usurp the axioms of established economic law? You see, said law stipulates that minimum wage laws redistribute economic capital sufficiently to decrease actual employment. It happens because the artificial elevation of low wages reduces the fiscal capability of employers to hire new workers or, often, to retain current workers. Now, I am sure you'll feel great when a minimum wage worker gets a raise, but you should also consider that a greater amount of workers will be put out of work due to their nascent unaffordability.
Note of Edification: For the studies establishing the above fact that the minimum wage reduces employment, please research Currie and Fallick (1993), Gallasch (1975), Gardner (1981), Peterson (1957), and Peterson and Stewart (1969).
The constraints of limited capital resources apply to businesses just the same way they apply to consumers, and they are not capable of being transcended just because progressives want to inflate the wages of unskilled workers. If they have to double the wages of their least skilled workers, then the ability to either retain those same individuals or hire new workers becomes severely damaged. In essence, employers are forced to increase the disposable income of certain employees, but it is an iron-clad law of economics that this increase forces other individuals to become unaffordable.
Put another way, if the government were to establish a "minimum gas price" of $5 per gallon, would you presume that Americans would consume the same amount of gas? Of course not. The more you pay, the less you want, right? Now, why do you presume the extension of that piece of common sense evaporates when employers are added to the equation?
When prices rise, demand goes down while supply goes up. When labor prices rise, demand (employers who are hiring) goes down while supply (citizens looking for work) goes up.
Note of edification: For research confirming the above facts of supply and demand, please consult your nearest high school economics textbook.
Do America's poor a huge favor and go study a supply and demand curve for a while, then get back to me when you've realized why minimum wage laws are bad policy.
In the meantime, I would be interested to hear the moral reasoning behind the unearned augmentation of salaries that prevents the very employment of others.
It is, quite simply, the assistance of some at the direct expense of others. This injustice is the very same that you incorrectly thrust at tax cut proponents as immoral. This time, however, economic law points the spotlight at your hypocritical lust for economic injustice.
Bob Fulkerson, director of the Progressive Leadership Alliance of Nevada, says, "The issue tugged at people's heartstrings," Fulkerson said. "They saw it as a basic matter of fairness."
Heartstrings are all you're going to pull with minimum wage campaigns, because you certainly aren't going to apply factual economics to the cause.
Unfortunately, direct empirical evidence regarding minimum wage legislation is difficult for the Average Joe to comprehend. First, no one is fired and told to blame the minimum wage. Second, many of those unskilled workers who are fired often choose not to look for new work. They either realize that they can no longer offer a service worth (at market value) what the minimum wage is, or they can no longer compete with the more skilled workers who are now (thanks to minimum wage) working the entry level jobs. The end effect is that there is no measurable effect in the unemployment rate, because the unemployment rate measures those who are looking for work.
Although they are not listed as unemployed, your precious unskilled workers are now on the public dole. Nice work with the heartstrings.
Note of Edification: For studies confirming the above fact that minimum wage laws increase the number of people on welfare, please consult Brandon (1995) and Leffler (1978).
Democrats and progressives are once again going through a wrenching self-evaluation about why they lost the White House again and how they can build a majority coalition to win it back. The minimum-wage victories in Florida and Nevada are a political neon sign blinking brightly. In January, when Bush is sworn in for a second term, the array of people and groups who worked to elect John Kerry should announce a nationwide moral crusade to raise the national minimum wage to the official poverty level--$9.50 an hour--which translates to $19,000 a year.
Just so you know, the minimum wage doesn't reduce poverty. It hasn't reduced poverty during its entire rise from 25 cents in the 1930s until $5.15 now. As shown earlier, it increases the disposable income of certain individuals while making it impossible for other individuals to find work.
Note of Edification: For studies confirming the above fact that the minimum wage fails to reduce poverty, please consult Bonilla (1992), Brown (1988), Johnson and Browning (1983), Kohen and Gilroy (1981), Parsons (1980), and Smith and Vavrichek (1987).
A minimum wage raise to $9.50 would have a negative effect on poverty, though. You see, the employees who are put out of work when minimum wage laws are enacted are the least skilled in the workforce. The reason for this is that the free market worth of their ability is often below the minimum wage. Raise the minimum wage, and the more it hurts those unskilled, uneducated workers who have to hope for wages that pay more than their work is worth. The more you raise the minimum wage, the more of these people exist, and the more likely it is that they cannot find the work at the higher wages.
The term "crusade" is very appropriate for your happy adventure in induced unemployment. Just like the real Crusades, your cause abandons reason and endorses inequality. Good luck.
Isn't it a moral issue when more than 36 million Americans live in poverty and more than 40 million people in the wealthiest county in the world lack health insurance?
Maybe, but putting more of them out of work is neither a moral nor an effective eliminator of their poverty.
Many major religious denominations support raising the minimum wage. The US Conference of Catholic Bishops says that Catholic social teaching regards work as a reflection of our human dignity, and that receiving poverty wages is an affront to individual self-respect.
Many major religious denominations also consider homosexuality a grave sin. Do you consider that position an effective argument, as well?
It is not considered an effective persuasive technique to cite the opinion of an organization that you consider wrong 90% of the time. Just a thought.
And isn't it immoral that Congress--which has given itself a cost-of-living pay raise for the past five years in a row--has allowed the federal minimum wage to lose its purchasing power, so that minimum-wage workers today are worse off now than they have been in decades?
You have outlined an unlikely situation. The average income of minimum wage workers increases 30% per year, simply because most people don't remain working at minimum wage for long. Furthermore, from 1975 to 1991, the only years the subject was studied, only 5% of the households making the lowest wages were still making them in 1991. Nearly three out of ten of them had moved to the richest fifth of America.
According to the facts, those who were minimum wage workers decades ago are now better off than they have ever been. Why can't we expect the same out of today's workers?
Note of Edification: For more studies confirming the above fact that few workers are permanently stuck at the minimum wage, please consult Brozen (1969) and Smith and Vavrichek (1992).
Second, if minimum wage is such a "winning electoral issue", why aren't congressmen falling all over themselves trying to raise it? Answer: Because every government-sponsored study has concluded that minimum wage laws reduce employment. See below for more.
At its peak in 1968, the minimum wage was worth the equivalent of almost $7 an hour today. That was also the last year that the minimum wage was above the nation's poverty line. The effect of the last increase in the federal minimum wage, to $5.15 in 1997, has been completely eroded by inflation. That figure (which equals $10,700 a year) is now less than one-third of the average hourly wage of American workers, the lowest level since 1949.
If it is one-third the average hourly wage of American workers, then most Americans are making wages much higher than the minimum, thus limiting the extent of this so-called moral crisis you adumbrate.
Beware of the implications of your own statistics.
If the federal minimum wage were increased to just $7 an hour, at least 7.4 million workers would receive a wage boost.
True, if the businesses could afford it. Even if they could, however, the low-end wage increase coupled with the subsequent wage increases of low-end (but above the existing wage floor) workers would decrease the available capital for new hires.
You are talking about an artificial (created by coercion) and unearned (higher than the market value for the work performed) pay raise that doesn't necessarily take into account the oblique effects on the workers.
If the minimum wage were pegged at $9.50, millions more would be lifted out of poverty.
Well, no, and I already told you why that's not true. But anyway...
Have you ever wondered why the Americans making $9.50 an hour make $9.50, rather than $5.15? The reason is because their work is valued more by society and thus is remunerated proportionally.
Some individuals make $5.15/hr, some make $9.50/hr, and some make $100,000/year. The salary is the value of the service. Minimum wage damages the economy in two ways. First, it ignores this fact. Second, its ignorance of this fact engenders a situation in which the least skilled workers (the ones whose labor worth is truly between $4-9/hr) are legally unable to find fair work. Some of them still find work, but the unearned transmogrification of market values permanently scars the economic mechanisms in the labor market.
The largest group of beneficiaries would be children, whose parents would have more money for rent, food, clothing and other basic necessities.
According to Census data and the Employment Policies Institute, about .002% of full-time workers are the sole breadwinners of a poor family. Do you consider two-thousandths of a percent to be a majority?
Business leaders still trot out economists to claim that raising the minimum wage will destroy jobs and hurt small businesses.
They "trot out" economists for good reason. Economists are the most knowledgeable about, you guessed it, economic issues. It's the same reason sick people "trot out" doctors, the mentally ill "trot out" psychiatrists, defendants "trot out" lawyers, students "trot out" professors, and researchers "trot out" scientists. And when those experts speak, the wise listen.
But the evidence, based on studies of the effects of past increases in both the federal and state minimum-wage levels (twelve states have minimum wages higher than the federal level), shows otherwise.
In addition to the previous Notes of Edification, here are more studies:
1) Florida State University economist David Macpherson found that, in Florida, a minimum wage raised to $8-10 would reduce employment by 131,000-222,000 jobs, and raise employers costs $4.9-8.8 billion. He also found that a full third of the wage gains would go to families making over $40,000/yr and that the youngest and least educated would be most affected by the increased unemployment.
2) David Neumark, a researcher at Michigan State University, studied twenty large and medium sized cities that have had living wage laws and concluded that, on average, a 50% rise in the minimum wage reduced the employment of affected workers (defined as those working at or around minimum wage) by 7%.
3) The 1983 Report to the U.S. Senate Committee on Labor and Human Resources of the General Accounting Office
found nearly total agreement that employment is lower than it would have been if no minimum wage existed.
4) From the inception of minimum wage laws, with the 1930 Fair Labor Standards Act, government studies have concluded that employment decreased as a result of these laws. In the 1930s, the government estimated that 30,000-50,000 jobs were lost as a direct result of the 25-cent minimum wage. The economic consensus continued to build momentum through the 1981 Report on the Minimum Wage Study Commission that discovered that the 46 percent rise in the minimum wage between 1977 and 1981 destroyed 644,000 jobs among teenagers alone. According to the study, "The evidence is now in, and the findings of dozens of major economic studies show that the damage done by the minimum wage has been far more severe than even the critics . . . predicted."
You might want to "trot" over to the library and do some research, yourself.
Because the working poor spend everything they earn, every penny of a minimum-wage increase goes back into the economy, increasing consumer demand and adding at least as many jobs as are lost.
First, Less than 2% of American workers work at or near the minimum wage, so increases of these Lilliputian salaries would only have a nugatory effect on aggregate consumer demand and thus the economy. Conservative estimates hold that the wealthiest 10% of Americans control 80% of the capital in this country. Now, are you honestly expecting the lowest 2% of Americans to have an effect on aggregate demand?
Second, the artificial price floor still remains intact for labor and serves to cement the unemployment and poverty of those (mostly unskilled workers) who are now unable to find work.
Third, where do these phantom dollars come from? Even if minimum wage workers were to put an entire month's paycheck back into the economy, the same amount will just come right back to them in the next month's pay.
Fourth, Even the most ardent minimum wage supporters (who recognize the existence of economics) only contend that the increase in real income is enough to offset job loss. No respected economist has ever theorized that minimum wage laws add jobs. Why? Because the contention is on the level of (to use our previous example) contending that an increase in gas prices causes more people to buy gas.
Even if the statistics didn't support the contention that living wage legislation damages the unskilled labor market, common sense would clearly prove it exclusively.
Most employers actually gain, absorbing the increase through decreased absenteeism, lower recruiting and training costs, higher productivity and increased worker morale.
If employers were able to gain from an increased wage, why do you suppose they don't do so? What desire would an employer have for not paying a higher wage? As you observe, higher wages tend to attract more efficient and happier workers. Additionally, higher wages create a competitive advantage.
So why don't they pay $10/hr for the jobs they pay $6/hr? Answer: Because the market prevents its affordability. When economic coercion raises wages for them, they absorb the cost increase through the firing and non-hiring of unskilled workers.
Let's put President Bush and his Congressional allies, who gave the richest Americans a huge tax break, in the position of explaining that a nurse's aide with two kids can raise a family on $5.15/hour or that a worker in a poultry plant doesn't deserve a wage boost.
Why don't you put yourself in the position of explaining...
a) Why a nurse's aide making $5.15 an hour would have two kids and think that she could effectively raise them.
b) Why society is composed of a whopping .00195% of full-time workers who are making minimum wage and are the sole breadwinners of a poor family, thus making such a situation not only avoidable but extraordinarily rare.
c) Why said minimum wage worker will not be able to move up the economic ladder, as most do.
d) Why, if a higher wage is possible for these imaginary individuals, aren't they making the higher wage?
Those who insist on pointing out the widening economic divide in the United States are invariably accused by conservatives of fomenting "class warfare." Well, perhaps a bit of class warfare is just what's needed.
Even if an economic divide existed (False Premise A, debunked elsewhere) and it were capable of being repaired with market intervention (False Premise B, debunked here), how exactly does "warfare" repair that divide?
There are thousands of new progressive activists who have emerged from this presidential election ready for the next battle. Engaging in a vigorous fight to raise our meager minimum wage is clearly the morally right thing to do.
OK, heroes. Before you go off slaying the demons of economic law, do some research.
