72o wrote:BigBallinStalin wrote:The size in the increase over the time its enacted matters; otherwise, you have situations like Nobanaga posted (see page 1 or 2), where the business can't readily cope with the shocking change.
BESIDES, there's a huge difference in the consequences of labor costs and how that effects business who mainly employ minimum wage-earners between increasing minimum wage from $7.00 to $7.50 (over from $7.00 to $8.00 over the course of a year) compared to a minimum wage increase from $7.00 to $30 over night (which would cause rampant chaos, and is just a ridiculous example to base one's example on because it's too extreme and not going to happen in any reasonable fashion).
The only way that business can "cope with the change" is to raise prices. So raising the minimum wage does nothing except increase inflation. Which, in the end, does nothing for the minimum wage earner, since their buying power is the same.
Except the minimum wage is not the biggest factor in setting most business prices. Most companies wind up paying more than minimum wage already. As I said before, those that don't are the notoriously profitable and quite large chains.
What keeping the minimum wage so very low TRULY does is benefit these larger chain organizations much more than the small business person. It is part of what allows them to keep their overhead below what the small business owner can provide.
When you are hiring only 1-2 people, you tend to be pretty aware of what they can and cannot do. You tend to need to and have the ability to hire people who are somewhat competent (as I said before, if you cannot, then the problem is likely YOU, not them! .. and I strongly suggest you study up on Steven Covey's writings.. no joke!). When you have a massive organization, this is often far less true. People there are a "dime a dozen". The jobs are usually pretty basic, so no skill or even basic abilities like showing up on time regularly are really counted upon heavily. There are other people to "take up the slack" and if someone screws up, they are fired and new ones hired. IN fact, I would suggest that whether it is Burger King, Walmart or Doller General, they more or less factor in an extra worker as a "cost of doing business", knowing they can keep cycling through workers until they finally get a few who are actually competent (and desperate enough to stay).
One point on this, having illegal workers absolutely helps. It is not so much that these big corporations directly hire illegal workers (sometimes they do, but not usually in huge numbers), the problem is often that illegal aliens take the jobs that are just above this basic level, the slightly skilled and even skilled positions that don't require high levels of education. This means that there are fewer and fewer "routes up" for the poorer worker. The part where I disagree, though (and this I debate in the appropriate thread, I just bring it up here to acknowledge that it is an issue) is in the solution and cause of this. Teh cause, again goes back to employers who would rather hire a quite competent and very willing illegal worker, rather than take the time and energy necessary to truly train a citizen who just barely graduated from high school or even dropped out. This is a double-sided coin. On the one hand, I think employers should be able to hire more competent workers. The problem is that when illegal workers are put into the mix, it skews things heavily. Its not just that these workers are better, its that they won't complain about safety issues, will put up more willingly with managers who are just plain jerks, etc. By making these workers legal, that portion is eliminated. Instead, it becomes strictly a cost versus worker quality issue.
72o wrote:To go back to b.k.'s example, and create a scenario acceptable to you, let's assume for a minute that b.k. only charges 15 dollars per lawn instead of 50. Now, raising the minimum wage from $7.00 to $7.50 has a big impact on b.k.'s profitability, and thusly his own income. He can now either reduce the hours he gives the kid he hired, or he can raise prices. Suppose he can't raise prices because his customers won't pay it - his competitors charge the same 15 bucks. So now, b.k. makes less than the minimum wage, because he's forced to pay the kid the minimum, and he has to pay for expenses for gas and maintenance, etc. out of his end.
Several problems. The first is that its unlikely that b.k. is truly only offering minimum wage, unless he is a fast food chain operator or some such (and even they often offer just a bit above minimum).
Second, if the minimum wage is raised, then it is raised universally, so competitors would also have to raise prices. (if competition is overseas, that is a case where careful tarrifs might be warranted). If they don't raise their prices, then they are cutting expenses in places other than the workers. B.K. would need to pursue those.
Thirdly, one person losing their job is unlikely to put much of a dent in the overall economy. Few workers actually get true minimum wage. What would happen is that a few people, mostly those who are not going to be keeping their jobs long anyway for a lot of reasons (whether its unprofitability of the company, their incompetance or just that they were going to move up and out to better things) would become unemployed. If the economy is in any way decent, and the person not completely incompetent, it will be a temporary loss, a temporary increase in demand, first for unemployment (an
insurance program, remember, so not a tax drain .. in fact, you pay taxes on unemployment compensation). HOWEVER, chances are that person was either already on food stamps, Section 8 housing, etc OR they were being supported by someone else anyway. So, in other words, the tax loss to society is minimal AND the increase demand is low, too. HOWEVER, the benefit to the many who will stay employed (businesses gotta have workers) can be very, very significant. It can be the difference between food stamps and no food stamps, section 8 and no section 8, etc. Even when that is not the case, extra money means extra "expendable" income that, in most cases will be put right back into buying things for themselves and their families. They BUY more, which boosts the economy.
In practical terms, even in the short term, the economics balance out. In the longer term, the rise in wages mean a minor boost. (looking for the data, this is an argument I have heard expressed more than once by economists who suppor the minimum wage increases or who are nuetral on them).
So, to sum up, the negative impacts (a few more people losing their jobs) is relatively small for society,and tend to be outweighed by the positive impacts (fewer people on aid programs, more money available to buy things, etc.) for society.
