Minimum Wage Increase: Support or Oppose ?

[brownindian]

Thoughts ?

 

[brownindian]

"The minimum wage is just a clumsy anti-poverty program," said Allen Sanderson, a senior lecturer in the University of Chicago's Department of Economics. "I'd rather go after skills andimprove skills. I want people to have more command in the workplace, and I want them to have much more than $7.25 an hour. I just don't want McDonald's to be the place where they can make that."

Sanderson and many other economists and public policy experts fear a number of unintended consequences if the minimum wage is raised from its current level to $10.10 per hour, as President Barack Obama has proposed. These include:

•A loss of jobs, as predicted by a recent Congressional Budget Office report, which forecast that total U.S. employment could be reduced by 500,000 jobs.

•An increase in consumer prices, driven by companies offsetting increased labor costs.

•The possibility that a higher minimum wage would attract more experienced workers and keep them in lower-wage jobs longer, blocking young people or people with limited work experience from entry-level jobs.

The job loss argument is supported by many different academic studies, though proponents of boosting the minimum wage offer up studies of their own showing negligible effects on employment.

But a widely cited 2006 study by David Neumark, an economics professor at the University of California at Irvine, and William Wascher, deputy director of research and statistics at the Board of Governors of the Federal Reserve System, examined the literature on this issue and found "the weight of the evidence points to disemployment effects."

It also found that "minimum wages may harm the least skilled workers more than is suggested by the net disemployment effects estimated in many studies."

Jonathan Meer, an assistant professor of economics at Texas A&M, in a study released in December, looked at how an increase in the minimum wage affects future job creation. The results were not good.

He found that the "minimum wage reduces net job growth, primarily through its effect on job creation" and that those effects "are most pronounced for younger workers and in industries with a higher proportion of low-wage workers."

That's of considerable concern to people like Sanderson and Craig Garthwaite, an assistant professor of management and strategy at Northwestern University's Kellogg School of Management.

"That's troubling, because I think it's important for people to get into the labor market," Garthwaite said. "Even if these aren't great jobs, they lead to better jobs as your skills improve. That's the idea. I don't think we should be doing anything to dissuade people from entering the job market right now."

The core of the argument here is that the minimum wage is meant to be commensurate with the work skills, education and productivity — at that point in time — of people entering the workforce. The goal, then, is to get in at that wage, develop skills and quickly work your way out of minimum wage and up the pay scale.

Sanderson said a minimum wage of $10.10 per hour might not only attract more qualified workers who would block out less-skilled candidates, it could lure young people out of high school and into jobs that — while low-paying — would be more appealing than ones at the current $7.25 per hour.

"The biggest anti-poverty program we have in the U.S. is getting somebody a job," Sanderson said. "If you're a high school dropout, you may be a lovely human being, but you're virtually unemployable. How do we make sure that five or 10 years from now, that person has reason to become a bigger part of the economy?"

The better approach, according to minimum wage hike opponents, is to put money into educationand job preparedness plans, which they say have proven success records. And then improve targeted programs like the Earned Income Tax Credit — which subsidizes low-income working families — to directly help the working poor.

"The minimum wage is poorly targeted, and a fair number of beneficiaries of an increase are not going to be people in poverty," Garthwaite said. "The minimum wage does go to people in poverty, but it also goes to a large number of people who are second or third earners in their family."

 

[brownindian]

According to the CBO report, raising the minimum wage would increase the earnings of low-wage workers by $31 billion. But the report also said only 19 percent of that increase would go to "families with earnings below the poverty threshold, whereas 29 percent would accrue to familiesearning more than three times the poverty threshold."

In an email, Sanderson wrote: "One would think you could drop money out of a helicopter and poor people would end up with more than 19% of it.". And Garthwaite said: "Broadly, if we decide as a society that we want people to have a minimum level of income, which is perfectly reasonable, there are far more efficient means to do that than a raise in the federal minimum wage."

FROM: http://articles.chicagotribune.com/..._1_minimum-wage-william-wascher-david-neumark

 

[Tornicade]

Min wage increases wages then cost of living gradually increases but at a rate faster than wages then min wage is raised again.

real questions is would you rather see minimum wages increases .

Interest rate drops and rents increase. even when demand stays steady.

rents increase and business operations cost increases leaving less money for labor.

etc

that just on the small business end.

big business reap the benfits of lower interest rates. and outgain inflation then distribute those gains amongst the top 10 to 15% if that.

Increased minimim wages initially put a strain on small business but once the money starts coming in the additional spending revenue generally tends to offset that.



this cycle will continue until at some point companies start allocating their wags in a responsible manner.

this is all rather oversimplified im sure one of our resident economist will put in their two cents

 

[The Oi]

I want to see people making enough money to get by. But I also recognize that many companies, particularly small ones, often operate on profits that are razor thing.

They just can't afford to do it.

 

[Lee]

I think $15 is to high but obviously $7 is way to low. Start with a instant increase to $10, then mandate a 2.5% min increase each year. Its crazy how long its been since it was raised.

 

[QuadrupleDouble]

If you raise the minimum wage, it will just make goods more expensive increasing the outgoing money for everyone and essentially voiding the increase.

You don't want to make minimum wage, be employable by anybody else. Adults who work in fast food, that aren't managers, can't pass a drug or background check. If they could, they'd be working a shit job for twice that amount. Those jobs are for kids and people who want a secondary income.

I want everyone to be able to make a living wage, but raising the minimum wage is not the way to do it.

 

[QuadrupleDouble]

I think $15 is to high but obviously $7 is way to low. Start with a instant increase to $10, then mandate a 2.5% min increase each year. Its crazy how long its been since it was raised.

2.5% increase isn't reasonable either. There were years during the downturn that I didn't receive an increase, or went backwards in compensation. I imagine the same thing happened to you being in the mortgage business, but I could be wrong. You can't mandate an increase if the business can't afford it.

Employable adults don't make $7/hr. We can barely hire employable adults at $12 an hour without any skills.

 

[Tornicade]

Nice concept , until you look into the past.. lets take a look at coal mining jobs, steel mills and other factory settings. These jobs wages have stagnated over the past 30 years.

despite a larger increase in workforce with most families now consisting of two incomes instead of one the buying power of these two income households is less than what one income households used to bring

http://economix.blogs.nytimes.com/2...ut-american-wages/?_php=true&_type=blogs&_r=0

http://www.epi.org/publication/a-de...-shared-prosperity-and-a-rising-middle-class/

http://money.cnn.com/2011/02/16/news/economy/middle_class/

what this chart shows is that now the stagnation is impacting the upper class.

I dont think raising wages alone address this problem but after 40 years its time something was done. and raising minimum wage readjusts the scale and forces companies to recalibrate how they distribute their wages.

now there are economist who have tried to dismiss these numbers by trying include the benefits workers have today but forgetting to adjust for the benefits provided back then as well as the overall medical cost in relation to those benefits.

meanwhile

This isnt about people working at Burger King or unemployable everywhere else.

 

[Ohdang]

If you raise minimum wage that much, the cost of living will go up and my wage won't, so I'll go from middle class to lower middle class. Fuck you, poor people. Get an education or a skill if you want more money.

 

[Tornicade]

2.5% increase isn't reasonable either. There were years during the downturn that I didn't receive an increase, or went backwards in compensation. I imagine the same thing happened to you being in the mortgage business, but I could be wrong. You can't mandate an increase if the business can't afford it.

Employable adults don't make $7/hr. We can barely hire employable adults at $12 an hour without any skills.

ahh the joys of middle middle management. taking it up the ass while being a mouthpiece for the guys who always make sure never to disclose their bottom line within meshing their salaries in with the rest.

 

[Tornicade]

If you raise minimum wage that much, the cost of living will go up and my wage won't, so I'll go from middle class to lower middle class. Fuck you, poor people. Get an education or a skill if you want more money.

really my salary went up 15 % the last wage increase. plus the standard increase.

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What It Means to Be Middle Class Today
Middle class might be the new poor.

The federal poverty line helps you determine whether you're poor, but no single measure tells you where you fall along the middle class spectrum.

By Geoff Williams April 24, 2014 | 9:05 a.m. EDT + More

Being middle class isn't what it used to be. That isn't so surprising, of course. Everything changes. One hundred years ago, you were considered middle class if you made $577 a year, according to TheCostofLiving.com. Today, many people make that much in a week. At least, according to the Bureau of Labor Statistics, the median weekly earnings of full-time workers for the first quarter of 2014 were $796.

But just what is middle class today? There seems to be a lot of evidence out there that the status of middle class is almost the new poor. To wit, in recent weeks:

• Country Financial, an insurance and financial services firm headquartered in Bloomington, Ill., released a survey of about 3,000 Americans last week. Known as the Country Financial Security Index, the survey has been measuring Americans' sentiments of their personal financial security since 2007. The survey suggests that most people (59 percent) believe it isn't possible or are no longer certain that it's possible to live a middle class existence and be considered financially secure.

• The National Low Income Housing Coalition released a report last month stating that affordable rent is becoming harder to find for many households across the country. It found that a full-time worker needs to earn $18.92 an hour to afford a two-bedroom rental without spending more than 30 percent of income toward rent. (Thirty percent is considered the most one should pay for housing, if you want to manage your money responsibly.)

• The Pew Research Center found that the number of people who consider themselves middle class has fallen almost a fifth, from 53 percent in 2008 to 44 percent in January. Could that be good news? Maybe more people now consider themselves wealthy? Probably not – in February 2008, 25 percent of people referred to themselves as lower-middle class or poor; now that number is 40 percent.

All of this can make anyone wonder: How much income do you need to make to be considered middle class? Is it something to aspire to, or considering how expensive it is to live, should we pity the middle class today? And is middle class the new poor?

[Search: U.S. News Financial Advisor Finder.]

We asked a handful of academics and financial advisors for their thoughts.

There is no universally recognized definition of middle class. There are federal poverty level guidelines, so if you happen to wonder if you're poor, you can consult the Department of Health & Human Services (not that you likely need guidelines to tell you if you're poor). But after that, you're on your own to decide if you're lower middle class, middle class, upper middle class or in the fabulously wealthy territory. But to get us started thinking about financial status, a U.S. household with four people living off $23,850 or less is considered poor. (Hawaii and Alaska, with higher costs of living, have different guidelines.)

One helpful yardstick to judge whether you're middle class: Median household income was $51,017 in 2012, according to the most recent U.S. census data. Robert Reich, a professor of Public Policy at the University of California-Berkeley and former Secretary of Labor, has suggested the middle class be defined as households making 50 percent higher and lower than the median, which would mean the average middle class annual income is $25,500 to $76,500.

If you're in the middle of the middle, however – not lower or upper-middle class – that would be an income range between $39,764 and $64,582, says Aaron Pacitti, an assistant professor of economics at Siena College in Loudonville, N.Y.

Again, it isn't official. Nobody gets a membership card to the middle class.

by this measure . I would actually fall in the middle class.

I own a house thats under 30% of my monthly pay.

the people who are impacted by this 40 years of stagnant wages are the educated and skilled.

 

[QuadrupleDouble]

ahh the joys of middle middle management. taking it up the ass while being a mouthpiece for the guys who always make sure never to disclose their bottom line within meshing their salaries in with the rest.

what?

 

[QuadrupleDouble]

Nice concept , until you look into the past.. lets take a look at coal mining jobs, steel mills and other factory settings. These jobs wages have stagnated over the past 30 years.

despite a larger increase in workforce with most families now consisting of two incomes instead of one the buying power of these two income households is less than what one income households used to bring

http://economix.blogs.nytimes.com/2...ut-american-wages/?_php=true&_type=blogs&_r=0

http://www.epi.org/publication/a-de...-shared-prosperity-and-a-rising-middle-class/

http://money.cnn.com/2011/02/16/news/economy/middle_class/

what this chart shows is that now the stagnation is impacting the upper class.

I dont think raising wages alone address this problem but after 40 years its time something was done. and raising minimum wage readjusts the scale and forces companies to recalibrate how they distribute their wages.

now there are economist who have tried to dismiss these numbers by trying include the benefits workers have today but forgetting to adjust for the benefits provided back then as well as the overall medical cost in relation to those benefits.

meanwhile

This isnt about people working at Burger King or unemployable everywhere else.

There are most definitely issues with CEO pay and wage stagnation, neither of which have anything to do with minimum wage.

I'm not sure how you handle CEO pay as how can you put a cap on how much someone can make? The wage stagnation issue is terrible though. I remember when gas was under $1 a gallon, but the rate of pay for a person in my position is not 400% of what someone would have earned at that time. The cost of everything has increased at a far greater rate than wages have. If you would have asked me as a young man if I was paid what I am currently making how well I thought I was doing and I'd tell you I'd be driving a benz and rich. I don't feel that way, but I'm doing alright, living above what is determined to be the maximum income at which wages and happiness are correlated, living beneath my means, and obviously have enough that my ex wife thinks she deserves to take a larger portion.

If the market doesn't influence a higher pay rate though, you can't force it.

 

[Ohdang]

really my salary went up 15 % the last wage increase. plus the standard increase.

I work in a hospital, ever since Obamacare happened "raise" is a dirty word where I work.