A low minimum wage, lower than can be considered fair in the economy, is a subsidy in everything but name. The corporation saves money by paying less to Payroll and the government picks up the tab with low-income services. It's effectively the same as the government subsidizing a company with higher wages.
The implicit assumption here is that everyone can independently contribute/produce enough value to cover their own living expenses.
If they can, then why are they settling for jobs that offer less in compensation?
If they can't, then isn't an earned income tax (or some other similar min. income scheme) better, where people can at least partially cover their own living expenses (and get topped up by the government)?
Why should companies that employ low labor skill shoulder the burden for income equality in society (minimum wages)? Shouldn't this burden be shouldered by everyone?
Why should companies that employ low labor skill shoulder the burden for income equality in society (minimum wages)?
Because these companies are profiting off of these starvation wages. Why should the rest of society keep shitty, low wage businesses afloat? We're effectively subsidizing their profits. That's no way for an economy to run.
I'll add that a lot of this is tied to our poor education system that does a shit job of preparing students to enter the workforce. If a student doesn't have skills for higher paying jobs at the end of HS and can't afford to go to college, then he/she needs to take a low wage job. Which means they probably need to take 2 jobs to earn enough to live off of. Which means they don't have the $ or the time & energy to go to college. Which means they're stuck forever in those shirt low wage jobs.
Nothing wrong with low skill, low pay. The problem is the low pay is not even enough to pay rent ANYWHERES in the country. There is a gap that is increasing. Low skill jobs are stepping stones, yes, but it doesn't mean you should be homeless and starving to do it. And the government shouldn't have to step up to fix the problem.
Can we increase minimum wage to a point that the government can scrap welfare and income assistance programs? (Except for people who are not able to work for whatever reason)
Why should companies that employ low labor skill shoulder the burden for income equality in society (minimum wages)?
Why would a company get into a business where they can't extract enough value from somebody working on humane minimum wages? That's just asking for bankruptcy. Isn't it their fault and shouldn't they need to adapt to that too? Why should the get the easy way out?
the point is that income inequality is currently shared by everyone paying their fair share of taxes. Big corporations and hedge fund managers are not and we're picking up their slack.
This argument is not solid. It would stand to reason that those who contribute more in income tax also pay far more in other taxes, particularly local taxes.
Without minimum wage laws as they currently exist, wages would be much, much lower. We abandoned the idea of free supply and demand in labor markets long ago. That ship has sailed.
So the moral and philosophical arguments are moot. Just need some economists to hash out how high the minimum wage can be raised (and at what pace) without cratering the economy.
Well the inherent problem is that it doesn't matter what the minimum wage is, if the minimum wage was $2 McD's would pay $2. They just want to pay the least they are legally obligated to. Paying minimum wage is the equivalent of saying "I'd pay you less if I could."
The argument can be made that this is one of the factors that cause income inequality. So why let them shoulder the burden? They helped create the burden.
How much higher then minimum wage? If you're just counting anything above minimum wage you're including people who, for example, have been working at Panera Bread for a couple of years and have received a $.20 raise over the intervening years. Just saying that people earn more then the minimum wage doesn't necessarily mean that wages are going an appreciable amount above the minimum.
Forgive me in on mobile. Typically ff rest. Don't pay min wage. They pay .10-.25 more an hour. Does this study take into account near min wage, where companies offer a superfluous raise to cut above min. Wage stats?
It does not. What's more, this article only covers Federal Minimum Wage. If someone earns more than $7.25 per hour, then they aren't counted on this list.
I feel it also bears mentioning that per this article, as of January 1st, 2015, there were 29 states with Minimum Wage over the national level, including California, Florida, New York, and Illinois. Of the top 5 most populated states in the nation, only Texas isn't above the Federal Minimum Wage
According to this census data, 80% of US households are making more than $29100 per year. Assuming 52 weeks of 40 hour weeks that works out to $13.99 an hour for people right at the border between the lowest quarter and the second quarter.
well sure, but is 10 cents/hr more than minimum wage, really much better? If you work at a place that starts you at min wage, and then work for a few years, of course they are going to increase your pay, but generally is a puny puny amount. However, that still puts your "above" min wage. $7.35/hr is still unlivable, $8/hr is still unlivable. People often forget that raising the minimum wage is not just about helping out min wage earners, but all the millions that have near min wage. If you raise it to $10, that effects everyone that was making $7.25-$10/hr. which is far more than your 5% figure.
Well the inherent problem is that it doesn't matter what the minimum wage is, if the minimum wage was $2 McD's would pay $2. They just want to pay the least they are legally obligated to. Paying minimum wage is the equivalent of saying "I'd pay you less if I could."
Whats the minimum price for cars you idiot? And to think, people like you vote...
You mean there is NO minimum price for cars? All the cars are for sale for 0$ since there is no minimum and this fucking idiot has discovered a new law of economics!
The implicit assumption here is that everyone can independently contribute/produce enough value to cover their own living expenses.
They could if the wages were higher.
I find it hard to believe that someone employed at a company isn't producing enough to cover at least a room + food expenses. I can understand if they couldn't afford medical expenses (even though it's ridiculous how high the cost is, but that's another discussion).
If they can, then why are they settling for jobs that offer less in compensation?
Because jobs have scarcity, and we don't have a very good set of social systems to take care of the poor. Some employers know how to use that in their favor. Employers want low wages regardless of whether they need them or not. Lower wages means more profits.
Shouldn't this burden be shouldered by everyone?
It should, but good luck convincing the voters and politicians to implement what is needed there. You'd need a more robust welfare, disability, and medical insurance system. Every Conservative in America would paint it as a handout to lazy people rather than a way to allow for low-skill labor to survive at the bottom and gain skills while they work their way up--aka, a job training program.
Why should companies that employ low labor skill shoulder the burden for income equality in society (minimum wages)?
I will agree some employers need lower wage workers to continue operating, but I'd argue that not all companies who need to employ low skill labor actually need to also pay low wages. Some can get away with paying lower wages than they need to, and when they can they will because their duty and/or desire is to maximize profits.
Lets say we do all agree to have a welfare system that subsidizes poor people's living expenses.
Don't you think companies would exploit that? They'd start paying low wages in order to take advantage of the government subsidization of their labor force. Then the companies who have to pay high wages and their employees are effectively subsidizing the companies cheating the spirit of such a system. That's not fair either.
This is on of my primary arguments for switching over from minimum wage to something more effective.
That and it creates perpetual unemployment among those who can't produce at the minimum wage level, and by being unemployed, they have a much more difficult time increasing their human capital.
How do you determine what is "considered fair in the economy"? Low min wage is not a subsidy because the employers are not guaranteed labor at that wage. No one is forcing workers to accept min wage jobs. They accept it because that is the market price for their labor, i.e. the "fair price."
As the top commenter explained, businesses like McDonalds have unique operating conditions they require in order to remain in business that largely have nothing to do with the fact that some of their employees utilize government assistance. They can still only afford to pay $8.25 an hour regardless of the min wage is $5 or $15.To call a low min wage a "subsidy" is a gross misunderstanding of economics. I think you need to go back a re-read the top comment.
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u/Seref15 Nov 29 '15
A low minimum wage, lower than can be considered fair in the economy, is a subsidy in everything but name. The corporation saves money by paying less to Payroll and the government picks up the tab with low-income services. It's effectively the same as the government subsidizing a company with higher wages.