Those in power know full well that an increase in minimum wage helps nothing or nobody.

 

How can having more money in your pocket help "nothing or nobody?"

With this increase, the cost of everything bought will increase as well. Bye, Bye to the dollar menus. They will become the $2 dollar menus. These low wage workers will be pumped until they say, "wait a minute, I make $3 more dollars per hour, but I don't have any extra money." This is a political game. If people want to make more than the minimum wage, they can work their way up through the company, learn a trade or go to college. Minimum wage jobs are not supposed to be destination jobs or careers, they are supposed to be starter jobs. The concept of actually earning something is a lost concept in our country.

Raising minimum wage does nothing because inflation overtime will compensate and will not cut into those that are in poverty due to those adjustments.

 

There is an econ professor at one of the Ivy Leagues researching this. I wish I could remember his name and which university he was with. Basically, he is researching previous min wage increases to determine if by increasing the min wage, companies that use min wage labor don't compensate by raising prices, other employees wages also go up because the "floor" was lifted and the ripple affects cause other price increases and in the end, due to price increases, does the new min wage actually pay for much more than before the min wage was raised? This research will take a while but I hope to hear an update about his findings, I am curious.

Just because a person is against a minimum wage increase doesn't mean they don't want to help low-income earners. Increasing the minimum wage will reduce jobs, or prices for many goods and services will have to rise. So who gets ahead? The government...more tax revenue, but citizens, all of us (unless one is a government employee), are negatively impacted. It is a clever scheme. The working poor can be helped more by providing training, child-care, tax breaks to incent them to keep working and to better themselves personally to get a higher wage.

 

Speaking from experience....I closed a business and laid off 15 people this year knowing that another increase in the minimum wage cannot be absorbed by price increases or higher productivity in a business in an already competitive area. And this business contributed directly >$50,000 a year to various taxing authorities although I never made a dime. This is a sad FACT!

Gallup poll last year showed 7 in 10 Americans favored raising the minimum wage to $9 an hour.

 

The problem with polling Americans about the minimum wage and other economic issues is that very few Americans have any real understanding of economics and how things like the minimum wage affect it. I strongly believe Macro Economics should be taught in every high school in the US just like Math, History, etc. and then taught again in college. So many times the question is, "Why did so and so win the election?" and the answer is, "The economy stupid". The problem is, many voters are not educated enough in Macro Economics to understand what is causing a growing or stagnant economy and how much control the president has that.

 

Saying that, I am up in the air about raising the minimum wage. Part of me wants to help low income earners but another side of me is curious if this economy is strong enough to absorb an increase min wage to prevent job losses with a min wage increase.

Something has to be done for the people using these low-wage jobs to live on their own or especially for those raising a family. I've seen some proposals for a large-scale expansion of the Earned-Income Tax Credit. Wouldn't that be a better option for helping these people than mandating a wage hike when the government then has no ability to control whether those jobs exist six months later?

 

You must be a fan of Noble Econ winner Milton Friedman! I like Dr. Friedman too. His videos you can find on Youtube are wonderful.

 

Milton Friedman once said the two places where the government has failed the poor to the greatest extent is failing public schools in poor neighborhoods an a minimum wage. His argument against a minimum wage is that is prevents those with the worst job skills from obtaining entry level employment to start building job skills. To make up for the lack of income, Dr. Friedman supported some type of negative income which the Earned Income Tax Credit is since sometime the amount of the Credit returned to low income tax payers is greater than income tax paid, sometimes much more. He also argued that a negative income tax could replace numerous social programs which are expensive to administer.

 

Friedman fully admitted that such a negative income tax has several draw backs. The first is you have to assume those receiving negative income tax payments are honest and are not "rigging" their tax returns to max out the amount of neg income tax they get paid. I have for several years volunteer at VITA (volunteer income tax assistance) which is designed to assist low income tax payers file their returns and get their refunds w/o the losing so much of their refund to tax prep places. I was always amazing how the amount of income tax declared was equal to the dollar amount to maximize the earned income credit. We had no way to proving they were rigging their returns so we just had to role with it.

 

Also, you have to hope recipients of neg income tax spend the funds in a responsible way. The problem with the earned income tax is that it is paid out in one lump sum for the entire year. You hope that recipients spread the funds out over the year but I know that often does not happen. At VITA, they would often tell me what they were going to do with the money which often left me wondering how money is really going to help their family.

 

So, as you said, neg income tax programs like the earned income credit make a lot of sense, it is their implementation that is a pain in the butt.

No one will be happy if the lowest of our income earners are helped in some way.

 

You really believe this? I think if the governor were to announce that the KY sales tax will be increase by 1% and that 1% is to fund trade school, community college or reg college education for low income people to get them into the work force, I think many Kentuckians would support that since they would see it as an investment into people to move them from social program recipients to tax payers.

Any time you're talking a hike in the wages there's mixed bag of results. CBO says a lot of people will lose jobs by 2016. They also say 900k families will be out of poverty and 16.5M low-wage workers will have more money.

 

CBO said it was also possible that no jobs would be lost and that the estimate of 500k was imprecise.

 

It's not just a boon to low-income/poverty folks. People who have 2 to 3 times the poverty level in income will also benefit.

 

Costs of some products could go up. OR people with low-wage jobs will be replaced by automation.

 

Let's say it is 500k people who lose their jobs by 2016. Is 900k families being lifted out of poverty a net win for the country?

Any time you're talking a hike in the wages there's mixed bag of results. CBO says a lot of people will lose jobs by 2016. They also say 900k families will be out of poverty and 16.5M low-wage workers will have more money.

 

CBO said it was also possible that no jobs would be lost and that the estimate of 500k was imprecise.

 

It's not just a boon to low-income/poverty folks. People who have 2 to 3 times the poverty level in income will also benefit.

 

Costs of some products could go up. OR people with low-wage jobs will be replaced by automation.

 

Let's say it is 500k people who lose their jobs by 2016. Is 900k families being lifted out of poverty a net win for the country?

 

 

 

400K / 240 M working age Americans = 0.17% you do the math.

You must be a fan of Noble Econ winner Milton Friedman! I like Dr. Friedman too. His videos you can find on Youtube are wonderful.

 

So, as you said, neg income tax programs like the earned income credit make a lot of sense, it is their implementation that is a pain in the butt.

 

As with any academic, there are things about Friedman I like, there are things about Friedman I don't. Anyone who reads my posts much in the P&R forums here knows that I'm an ardent free-trade advocate but that I also believe in the role of trade unions; they know I'm mostly a free-market advocate but believe that any just economic system should include adequate safeguards for people who fall through the cracks.

 

Macroeconomic theory is hard. It's hard because it's mostly conjecture. It's attempting to take the decisions of independent-thinking people and try to conglomerate their decision-making in a way that helps us understand their behavior. None of that is easy to do and some of it is nigh on impossible.

 

We don't really know that a minimum wage hike will cause job losses, but we have some data from the past and we have some microeconomic ideas about how business owners behave in a situation where costs due to wages suddenly rise.

 

And while job losses are likely in the short term, it's also important to remember that successful business likely won't lay anyone off or cut hours due to a wage hike, they'll simply keep running in other ways. There's a calculation to be made between likely job losses and potential earnings increases for low-wage workers who retain their jobs. The same CBO report from the first post had the numbers for both. I don't know how accurate either number is (I generally don't trust those types of numbers from economists) but that's where the focus of this debate lies.

Let's say it is 500k people who lose their jobs by 2016. Is 900k families being lifted out of poverty a net win for the country?

 

I understand the trade off, I just wonder would increasing prices cause the measure of being in poverty to rise and "reclaim" many of the 900k who were lifted out of poverty?

 

Again, I am neither for or against this increase, I just think too many Americans are looking at the situation just on the surface and not considering the ripple affects it could have which would hender some of the benefits that min wage is hoped to bring about.

I understand the trade off, I just wonder would increasing prices cause the measure of being in poverty to rise and "reclaim" many of the 900k who were lifted out of poverty?

 

Again, I am neither for or against this increase, I just think too many Americans are looking at the situation just on the surface and not considering the ripple affects it could have which would hender some of the benefits that min wage is hoped to bring about.

 

I heard an interview today saying that even with increased costs those families would still come out ahead. I haven't searched for any supporting info though.

The Gap announced today they will raise their minimum to $9 and then $10 in order to attract and retain better employees. Their win is that better employees make the experience better for the consumer which is a win for the company.

 

Companies with high turnover have costs, too.

The $10.10 option would also be raised every year for inflation. The $9 option would not.

 

http://www.cbo.gov/sites/default/files/cbofiles/attachments/44995-MinimumWage.pdf

Just because a person is against a minimum wage increase doesn't mean they don't want to help low-income earners. Increasing the minimum wage will reduce jobs, or prices for many goods and services will have to rise. So who gets ahead? The government...more tax revenue, but citizens, all of us (unless one is a government employee), are negatively impacted. It is a clever scheme. The working poor can be helped more by providing training, child-care, tax breaks to incent them to keep working and to better themselves personally to get a higher wage.

 

Speaking from experience....I closed a business and laid off 15 people this year knowing that another increase in the minimum wage cannot be absorbed by price increases or higher productivity in a business in an already competitive area. And this business contributed directly >$50,000 a year to various taxing authorities although I never made a dime. This is a sad FACT!

 

Wait a minute. You closed a business becauase some one MIGHT raise the minimum wage? Yeah, that makes sense.