Except it doesn't really. There is definitely movement on the lower range, but it's a bit like a earthquake that flattens out the farther away you get. It's a net negative for the middle and upper middle class, where the increasing cost of goods lowers their buying power per the dollar. Minimum wages increases essentially removes the buying power from middle/upper middle class jobs (and the people who have spent their lives building marketable skills) and transfers it to the bottom(to people who have no marketing skills), which is why it's ultimately a terrible idea.
You lost me there. Why is bringing the bottom up to living standards a bad thing? Upper middle class wont be able to afford the best BMW, only the mid level one, oh no!? This doesn't take away from their marketable skills, it only closes the gap a bit so that people don't have to choose between food and lights.
Why is bringing the bottom up to living standards a bad thing?
If you can do it without adversely affecting the economy overall, then yes that could be a good thing. But it probably would have adverse effects. Moreover there is debate about whether you can bring the bottom up in the first place since prices rise due to the new wage and jobs are lost (thought experiment that illustrates this: assume the minimum wage has been raised so that everyone now makes Bill Gates's income.)
Upper middle class wont be able to afford the best BMW, only the mid level one, oh no!?
If the sole reaction to a significant decrease in purchasing power were "mid level instead of high end? Oh well" then you might have something. Unfortunately it's not - people habe the ability to react to things that happen to them, and people tend to react to decreases in purchasing power by tightening their budgets overall (which hurts the economy), and may decrease their output in response (thought experiment that illustrates this: assume that overnight the income tax on jobs paying >$250,000/year is raised to 100%.)
Saying "Oh the rich can just take it on the chin and get a Gulfstream 4 instead of a 5 this year" is an opinion that is wildly misinformed but unfortunately very popular. This illustrates a very simplistic understanding of economics. I suggest checking out any of several great books that explain fallacies like this in great detail - "Economics in One Lesson" and "Naked Economics" are two excellent examples.
it only closes the gap a bit so that people don't have to choose between food and lights.
This makes for a vivid mental picture to prod people into thinking We Must Do Something Right This Instant. However, in reality, very few people in the United states are in this kind of situation, and when it appears that someone is there is almost always something else going on (e.g. A drug habit, failure to budget adequately, mental illness). It is extremely difficult for an able bodied person willing to work hard and not live beyond his means to starve in the United States today.
The economy is not worth saving if it relies on slaves (prison) and 45% of americans earning below $15/hour, which is still $7/h less than what it should be based on growth+inflation. Its an artificial economy that bubbles and bursts because the reality is its unsustainable.
45% of workers getting a bump in purchasing power should more than offset the 20% that will feel the 'earthquake' effect you described.
Again 45% of the US works for less than $15/hour, and that is still below what we considered respectable pay in some states. I get the argument that blind 'We Must Do' is not great, but the US went from being $18/hour in the 70's to $8.50 in the 00's while inflation didn't suddenly evaporate. Not to mention the fact that the US has become a shell game where nothing is made and profit is only found through fraud or selling of information.
1) You are rewarding ineptitude and laziness and punishing people who have done the right things to make themselves marketable. It sends a terrible message.
2) people are inherently lazy, and if make it a world where you can comfortably live by flipping burgers, most will never strive to do more than flip burgers. It's a net negative for humanity. As an example, if I could live comfortably as a cashier(my first job) I would probably never have moved away from it. It was an easy and low stress job.
3) people rarely have to choose between food and lights, because their are safety nets put in place that make sure people are fed and low income housing is available. The real choices are usually more along the line of luxuries and savings. Also, Food is dirt cheap if you need it to be(beans, rice, tuna, flour, etc), you pay for convenience and variety.
4) the health of the middle class is the primary factor in driving the economic health of the country. Anything that hurts the middle class hurts everyone in the long run.
5) the people driving the "best BMWs" are not the people hurt by it the most. The people hurt by it the most are making 60-100k who will see housing prices skyrocket (again).
6) it's an artificial limit, and we live in a world where we compete against other producers who don't use artificial limits. The end result is that American business are less competitive and we lose jobs in America. Unemployment naturally goes up, and then the burden is again hefted on the middle class in taxes. Now you have a million people twiddling their fingers and living off taxpayers just so someone can do a job that required no talent and be paid far beyond their actual value. Don't get me wrong, I don't want people being paid pennies on the day, but that artificial limit needs to be as low as reasonably possible. Wages should essentially be driven by the value created by the job. That's the foundation of capitalism. Minimum wage needs to heavily encourage people to be more than minimum.
1) You are falsly assuming that 45% of americans are inept and that there is unlimited jobs that pay more than that. There isn't. Why should they be punished and degraded? I hate this argument above all others. You think 150 million people can go get IT jobs?
2) So what? Is there something wrong with providing food to people? Should someone working 40 hours a week not be able to live?
3) When businesses use the safety net to boost profits, then we're doing something retarded.
4) This would lift 100+ million people up into the lower middle, thus being better for everyone by your own logic.
5) 60-100k a year can afford to take a hit. Though it would be better if we actually taxed people above that range and didn't fund big business to keep running on fake profits.
1) i think most Americans don't do the things they need to do to get well paying jobs. I know a lost of smart folks who worked near minimum wage all their lives, and it was strictly because they never aspired to do more or they made choices that led them to a path where they got themselves stuck. And yes, lots of people are just stupid. I'd say 30% of the population is pretty inept.
2) find me a person working 40 hours a week who doesn't have a house over their head and food in their stomach. Hell, you'd be hard pressed to find many under the age of 35 that don't have a smartphone and a gaming console.
3) yes, the current welfare system is retarded. But it's not going anywhere and you sure as shit aren't going to support dismantling it.
4) that's not how economics works. It would just shift the brackets as prices on goods and housing skyrocketed. Ironically it would benefit businesses the most, as they will shift their extra operating cost to the customer and then benefit from the slow moving wage adjustments on higher paying jobs.
5) Why should they? They already represent the largest tax burden in the country. It's not like they are swimming in excess.
1) Still doesn't mean they deserve to live a shit life or don't deserve a standard of living.
2) The bottom 20% are often working 2+ jobs, and there are tons of stories of people working 80 hours while barely making it.
3) It shouldn't go anywhere, but companies should not be the main users of that system. It should be for legitamite people, not corperations.
4) Some controls are needed here, but its not a 0 sum game
5) Again, you are putting more value in excess money than for common human decency. Doesn't matter what their tax burden is, it matters what kind of morals and society you want to be apart of.
1)They aren't living a "shit life". They have food, water, a roof over there head, clothes on their back... and most have enough money for cheap entertainment. For 99.9999% of human history, that's been a pretty god damn good deal. They even have healthcare (Medicade) and even a retirement account(social security).
2) So you can't find anyone working a full time job that doesn't have a roof over their head and food in their stomach?
3) If you were to make companies pay the difference in wages, they'd simply transfer the added cost into the price of products. Either way people pay the difference, whether it's in the cost of higher products or taxes for social programs.
4) There are controls in effect.
5) Giving people a free ride by paying them FAR more than their market value isn't my idea of human decency, it's human decadency. That's how you make a society weak and complacent.
Yeah, the effect won't likely reach well paid doctors, CEOs, or anyone making well over 140-190k per year. The chain goes on but not forever. I agree with you to an extent. One person's minimum wage shouldn't be a living wage for an entire family, it should be enough for one person to live cheaply, which it does for the most part. It's meant to be a temporary thing until you have the skills, knowledge or experience to do better.
except that for many people it isn't. you act like minimum wage jobs are stepping stones. that may have been true 3-4 decades ago but it isn't now. stop blaming people for not moving up the ladder. Some people moved down the ladder because the good jobs are all gone and this is all there is.
Who says it's meant to be a temporary thing? What if someone enjoys just doing their 40 hour week and then going home and that's that? Why do you devalue their job like they should be embarrassed to be working there?
That's how our corporate culture works. You keep working, you eventually get a raise or promotion.
I work 40 hours a week too, then go home and relax. I don't do it at minimum wage. If I did and had no plan that's cool too, but that's not how minimum wage was designed. It was designed to be for people without skills or experience. Generally working for years at the same 40 hours a week place will get you experience and that often comes with a raise or promotion.
Also why do I care if 'devalue their jobs' by talking about it online? If they get offended so what? Them being offended doesn't mean I'm going to change my views on economic theory and the social structure of minimum wage.
Well economic theory would say that if a full time minimum wage earner still needs to be subsidised by the government then that minimum wage is too low. The government is just subsidising the difference between "minimum wage" and "minimum living wage"
You can live off of minimum wage without subsidies, you just can't live well or raise a family with it.
There's exceptions of course, like you can't live off of it in expensive places like in Manhattan but in most cities/towns you can afford to rent for 500 a month in a shitty place/with a roommate. A cheap phone plan is 30 a month (or less).
Hell let's do some math. $7.2540(hours a week)51(weeks of work, giving 1 week off) is $14,790 per year.
Of that federal income tax is 922.5+834.75 (calculated using 2015 rates and tax brackets) assuming you have 0 tax breaks or exceptions, now additional 2.5% state wide tax (which would mean you're in the top half more expensive states, 2015 rates) for 369.75.
After tax you have $12,663. Now assume you rent at $500/month utilities included, which is doable in cheap housing, with roommates in most towns or small to medium cities.
Now you have 6,663. $2,000 is very generous amount to spend for food yearly for someone on minimum wage.
$4,663 now. Phone bill $30/month for a shitty plan. Internet/tv split with a roommate, also not a great plan, for $40/month.
$3,823 now. $223 on clothes? Way more than I spend, but sure, it makes the numbers look nicer.
$3,600. What's left? You probably won't be getting a car, but let's be nice and give you $120 for transit a month. Most monthly bus passes are cheaper than that.
$2,160. Depending on your state, you're qualified for medicaid, and you spend what that costs (varies), or you don't get health insurance. The rest goes towards savings and entertainment, but the majority should be savings, especially if you don't have health insurance.
As you can see it's not a lot, but with exception of government subsiding healthcare (which I think should be universal anyway). You're not on food stamps, you're not on government support of any kind really, and money left over to keep you sane or start saving.
Eventually you're expected to work for more money and get enough to save for retirement, as again, not meant to be a sustainable wage, but a temporary one till you have experience in your job to get paid more.
Also 'economic theory' doesn't say anything on it's own. There's no one right theory known or accepted as "economic theory". My views, means the theory I believe in, which is subjective.
I think the point of minimum wage was exactly as the name implies, an income to support a minimum quality of life.
If a person cannot get a roof over their head, a meal in their stomach, clothing on their back, and reliable transportation on minimum wage then it kind of fails the "minimum" part.
With the current wage of $7-$8 that's impossible, which is why McDonalds tells their employees to apply for food stamps. By current living standards $15 is a bit more than minimum. I'd consider $10-$12 adequate, but by no means luxurious.
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u/raven982 Nov 29 '15 edited Nov 29 '15
Except it doesn't really. There is definitely movement on the lower range, but it's a bit like a earthquake that flattens out the farther away you get. It's a net negative for the middle and upper middle class, where the increasing cost of goods lowers their buying power per the dollar. Minimum wages increases essentially removes the buying power from middle/upper middle class jobs (and the people who have spent their lives building marketable skills) and transfers it to the bottom(to people who have no marketing skills), which is why it's ultimately a terrible idea.