Child Labor

 

Child-labor laws were and are a blow against the freedom to work and a boost in government authority over the family. You might be surprised to know that the laws against "child labor" do not date from the 18th century. Indeed, the national law against child labor didn't pass until the Great Depression, in 1938 (Fair Labor Standards Act). It was the same law that gave us a minimum wage and defined what constitutes full-time and part-time work. It was a handy way to raise wages and lower the unemployment rate: simply define whole sectors of the potential workforce as unemployable.

 

By the time this legislation passed, however, it was mostly a symbol. Youth labor was expected in the 17th and 18th centuries, since remunerative work opportunities were newly present. But as prosperity grew with the advance of commerce, more kids left the workforce. By 1930, only 6.4 percent of kids between the ages of 10 and 15 were actually employed, and 3 out of 4 of those were in agriculture.

 

In wealthier, urban, industrialized areas, child labor was largely gone, as more and more kids were being schooled. Cultural factors were important here, but the most important consideration was economic. More developed economies permit parents to "purchase" their children's education out of the family's surplus income, if only by foregoing what would otherwise be their earnings.

 

Here is another example:

 

If I wanted to go to a gas station and tell them I will stand outside and pump people's gas for 3$/hr, just work enough to make money to eat, then I should have the right to do so. It provides employment for low-productive jobs. Jobs your policy take away and mandate the people who it effected to become dependent on the government.

 

Slave wages

 

The economic case against minimum wage laws is simple. Employers pay a wage no higher than the value of an additional hour's work. Raising minimum wages forces employers to dismiss low productivity workers. This policy has the largest affect on those with the least education, job experience, and maturity. Consequently, we should expect minimum wage laws to affect teenagers and those with less education. Eliminating minimum wage laws would reduce unemployment and improve the efficiency of markets for low productivity labor.

 

The Iron Law of Wages

 

Although the full theory is fairly irrelevant today in that wages do not have a lot to do with population growth, the idea has some merit. Without some regulation wages will tend to fall as the population grows. The theory said that if the population grew enough the wages would fall so that people could not survive and the then the population would fall again. Since the population continues to grow, there will ALWAYS be more people than there are jobs. The wages then would be rock bottom. If you will go and work for $3 what is to keep me, the unemployed one, from going to the same gas station and saying that I will do it for $2. Now I have a job, but we are both poor and neither of us can survive. The minimum wage - a regulation keeps that from happening - some.

 

I am not understanding your point on history of child labor.

Kiplinger expects the number to trend up as summer approaches. Not good for the president if that happens.

Kiplinger expects the number to trend up as summer approaches. Not good for the president if that happens.

 

UE rate?

Kiplinger expects the number to trend up as summer approaches. Not good for the president if that happens.

 

UE rate?

 

From what I'm reading, Kiplinger estimates we'll be at 8.3% at the end of 2012. That's where we're at now, right?

The Iron Law of Wages

 

Although the full theory is fairly irrelevant today in that wages do not have a lot to do with population growth, the idea has some merit. Without some regulation wages will tend to fall as the population grows. The theory said that if the population grew enough the wages would fall so that people could not survive and the then the population would fall again. Since the population continues to grow, there will ALWAYS be more people than there are jobs. The wages then would be rock bottom. If you will go and work for $3 what is to keep me, the unemployed one, from going to the same gas station and saying that I will do it for $2. Now I have a job, but we are both poor and neither of us can survive. The minimum wage - a regulation keeps that from happening - some.

 

I am not understanding your point on history of child labor.

 

By the time the Fair Labor Standards Act passed in 1938, it was already passed it's time. By 1930, only 6.4% of children between ages 10-15 years old were actually employed and 3 of those 4 were in agriculture. Emphasis was being placed on education as our economies were becoming more developed and there was not a need for child labor, which is natural. I can't rewrite it any simpler. The law was out-dated.

 

Iron Law by Karl Marx

 

That is one of the biggest fallacys ever. If the population is increasing, then food, necessaries, and conveniences must be made to support them. The demand for labor increases. Which, at the time, Marx completely ignored. (see below)

 

If wages rise above subsistence, population increases will drive them back down again. The rising standard of living in England in Marx's own day, as capitalism continued to develop, falsified the iron law, but Marx ignored this.

 

The power of the laborer to support himself, and the family which may be necessary to keep up the number of laborers, does not depend on the quantity of money which he may receive for wages, but on the quantity of food, necessaries, and conveniences become essential to him from habit, which that money will purchase. The natural price of labor, therefore, depends on the price of the food, necessaries, and conveniences required for the support of the laborer and his family. With a rise in the price of food and necessaries, the natural price of labor will rise; with the fall in their price. the natural price of labor will fall.

 

A rise in wages, from an alteration in the value of money, produces a general effect on price, and for that reason it produces no real effect whatever on profits.

 

The "Iron Law of Wages" is a very poor theory. Especially the part you are emphasizing on, subsistence over wages. If the population grows, the demand for goods grows, thus demanding more employment. The price on these goods and wages are determined by each other. A drop in wages results from a drop in prices (vice-versa). So no profit is lost or gained.

Edited February 7, 201214 yr by Know It All

By the time the Fair Labor Standards Act passed in 1938, it was already passed it's time. By 1930, only 6.4% of children between ages 10-15 years old were actually employed and 3 of those 4 were in agriculture. Emphasis was being placed on education as our economies were becoming more developed and there was not a need for child labor, which is natural. I can't rewrite it any simpler. The law was out-dated.

 

Iron Law by Karl Marx

 

That is one of the biggest fallacys ever. If the population is increasing, then food, necessaries, and conveniences must be made to support them. The demand for labor increases. Which, at the time, Marx completely ignored. (see below)

 

If wages rise above subsistence, population increases will drive them back down again. The rising standard of living in England in Marx's own day, as capitalism continued to develop, falsified the iron law, but Marx ignored this.

 

The power of the laborer to support himself, and the family which may be necessary to keep up the number of laborers, does not depend on the quantity of money which he may receive for wages, but on the quantity of food, necessaries, and conveniences become essential to him from habit, which that money will purchase. The natural price of labor, therefore, depends on the price of the food, necessaries, and conveniences required for the support of the laborer and his family. With a rise in the price of food and necessaries, the natural price of labor will rise; with the fall in their price. the natural price of labor will fall.

 

A rise in wages, from an alteration in the value of money, produces a general effect on price, and for that reason it produces no real effect whatever on profits.

 

The "Iron Law of Wages" is a very poor theory. Especially the part you are emphasizing on, subsistence over wages. If the population grows, the demand for goods grows, thus demanding more employment. The price on these goods and wages are determined by each other. A drop in wages results from a drop in prices (vice-versa). So no profit is lost or gained.

 

First of all I am not taking the Iron Law theory from Marx (Thomas Malthus) and I am not a pure theorist.

 

Secondly, even in the best of times, this country has not experienced 0 unemployment. The fact is the need for goods increases with increased population but not necessarily the need for labor, especially as technology grows. So your denouncement is a very poor denouncement because it was made in an age prior to the onslaught of technology. If there is not a minimum wage, and there is more than 1 person NEEDING a job the wage, in a pure capitalist system will be pushed down.

First of all I am not taking the Iron Law theory from Marx (Thomas Malthus) and I am not a pure theorist.

 

It was imputed by Marx. I never said you were a pure theorist, you chose to use this fallacy.

Secondly, even in the best of times, this country has not experienced 0 unemployment. The fact is the need for goods increases with increased population but not necessarily the need for labor, especially as technology grows. So your denouncement is a very poor denouncement because it was made in an age prior to the onslaught of technology. If there is not a minimum wage, and there is more than 1 person NEEDING a job the wage, in a pure capitalist system will be pushed down.

 

Wow. The machines fallacy. This is great. I feel like a teacher.

 

The demand for labor does grow with the increase in demand for goods...and to say it doesn't due to technological advancements shows your lack of economic understanding. To say technology creates unemployment is completely inaccurate and proves your focus is directed toward a specific industry instead of the economy as a whole.

 

I get off work at 10:30, so I must post-pone my logical reasoning until then. Nevertheless, I will teach you how economics actually work and I'll explain your "machines" fallacy.

Among the most viable of all economic delusions is the belief that machines on net balance create unemployment. The belief that machines cause unemployment, when held with any logical consistency, leads to preposterous conclusions.

 

This is an example from a book called 'Economics in One Lesson'

 

Suppose a clothing manufacturer learns of a machine that will make men’s and women’s overcoats for half as much labor as previously. He installs the machines and drops half his labor force. This looks at first glance like a clear loss of employment. But the machine itself required labor to make it; so here, as one offset, are jobs that would not otherwise have existed. The manufacturer, however, would have adopted the machine only if it had either made better suits for half as much labor, or had made the same kind of suits at a smaller cost. If we assume the latter, we cannot assume that the amount of labor to make the machines was as great in terms of payrolls

as the amount of labor that the clothing manufacturer hopes to save in the long run by adopting the machine; otherwise there would have been no economy, and he would not have adopted it. So there is still a net loss of employment to be accounted for. But we should at least keep in mind the real possibility that even the first

effect of the introduction of labor-saving machinery may be to increase employment on net balance; because it is us ually only in the long run that the clothing manufacturer expects to save money byadopting the machine: it may take several years for the machine to “pay for itself.”

 

After the machine has produced economies sufficient to offset its cost, the clothing manufacturer has more profits than before. (We shall assume that he merely sells his coats for the same price as his competitors, and makes no effort to undersell them.) At this point, it may seem, labor has suffered a net loss of employment, while it is only the manufacturer, the capitalist, who has gained. But it is precisely out of these extra profits that the subsequent social gains must come. The manufacturer must use these extra profits in at least one of three ways,

and possibly he will use part of them in all three: (1) he will use the extra profits to expand his operations by buying more machines to make more coats; or (2) he will invest the extra profits in some other industry; or (3) he will spend the extra profits on increasing his own consumption. Whichever of these three courses he takes, he will

increase employment.

 

In other words, the manufacturer, as a result of his economies, has profits that he did not have before. Every dollar of the amount he has saved in direct wages to former coat makers, he now has to pay out in indirect wages to the makers of the new machine, or to the workers in another capital industry, or to the makers of a new house or motor car for himself, or of jewelry and furs for his wife. In any case (unless he is a pointless hoarder) he gives indirectly as many jobs as he ceased to give directly. But the matter does not and cannot rest at this stage. If this enterprising manufacturer effects great economies as compared with his competitors, either he will begin to expand his operations at their expense, or they will start buying the machines too. Again more work will be given to the makers of the machines. But competition and production will then also begin to force down the price of overcoats.

 

There will no longer be as great profits for those who adopt the new machines. The rate of profit of the manufacturers using the new machine will begin to drop, while the manufacturers who have still not adopted the machine may now make no profit at all. The savings, in other words, will begin to be passed along to the buyers of overcoats— to the consumers. But as overcoats are now cheaper, more people will buy them. This means that, though it takes fewer people to make the same number of overcoats as before, more overcoats are now being made than before.

 

If the demand for overcoats is what economists call “elastic”—that is, if a fall in the price of overcoats causes a larger total amount of money to be spent on overcoats than previously—then more people may be employed even in making overcoats than before the new labor-saving machine was introduced. We have already seen how this

actually happened historically with stockings and other textiles. But the new employment does not depend on the elasticity of demand for the particular product involved. Suppose that, though the price of overcoats was almost cut in half—from a former price, say, of $50 to a new price of $30—not a single additional coat was sold.

The result would be that while consumers were as well provided with new overcoats as before, each buyer would now have $20 left over that he would not have had left over before. He will therefore spend this $20 for something else, and so provide increased employment in other lines.

 

In brief, on net balance, machines, technological improvements, economies and efficiency do not throw men out of work.

 

Two more examples history has taught us (From the same book).

 

For William Felkin, in his 'History of the Machine-Wrought Hosiery Manufactures' (1867):

 

Tells us that the larger part of the 50,000 English stocking knitters and their families did not fully emerge from the hunger and misery entailed by the introduction of the machine for the next forty years. But in so far as the people believed, as most of them undoubtedly did, that the machine was permanently displacing men, they were mistaken, for before the end of the nineteenth century the stocking industry was employing at least 100 men for every man it employed at the beginning of the century.

 

 

Arkwright invented his cotton-spinning machinery in 1760. At that time it was estimated that there were in England 5,200 spinners using spinning wheels, and 2,700 weavers—in all, 7,900 persons engaged in the production of cotton textiles. The introduction of Arkwright’s invention was opposed on the ground that it threatened

the livelihood of the workers, and the opposition had to be put down by force. Yet in 1787—twenty-seven years after the invention appeared—a parliamentary inquiry showed that the number of persons

actually engaged in the spinning and weaving of cotton had risen from 7,900 to 320,000, an increase of 4,400 percent.

It wouldn't surprise me to know you may disregard that entire post but at least read the quoted. You need to understand what you are saying, it's completely inaccurate but a common fallacy among many.

It wouldn't surprise me to know you may disregard that entire post but at least read the quoted. You need to understand what you are saying, it's completely inaccurate but a common fallacy among many.

 

I don't dismiss the anecdotal story of the non-displacement of workers in the 18th and 19th centuries. But we aren't talking about those same machines. Were horses displaced from hauling goods around the country. I know it is a poor example but still it happened. How about the fact that in Waddy Kentucky I can order a hamburger at a mcdonald's without every talking to a human - at the drive up window. Or that I can go to Wal-Mart and Kroger and buy goods without ever talking to a human. Those jobs and those people have been displaced. If the computers used to allow me to purchase these things were made overseas then the profits of theses businesses are being being sent there and the jobs that were displaced will not return, the folks who were working in them will not have buying power, demand will go down and it does not matter the supply.

I shouldnt to repeat myself again. Read the quoted, you don't understand the concept that consumers create employment. That an increase in production, through labor-saving technologies, does not create unemployment. You are not seeing the indirect and secondary consequences. Look at the economy as a whole, not just a specific industry. As to those examples are "poor" or outdated, the concept stays the same. You are completely wrong.

Why are those machines being made in foreign countries? And other items as well? Taxes and regulation. Labor unions. Thanks for proving my point.

Suppose a clothing manufacturer learns of a machine that will make men’s and women’s overcoats for half as much labor as previously. He installs the machines and drops half his labor force. This looks at first glance like a clear loss of employment. But the machine itself required labor to make it; so here, as one offset, are jobs that would not otherwise have existed. The manufacturer, however, would have adopted the machine only if it had either made better suits for half as much labor, or had made the same kind of suits at a smaller cost. If we assume the latter, we cannot assume that the amount of labor to make the machines was as great in terms of payrolls as the amount of labor that the clothing manufacturer hopes to save in the long run by adopting the machine; otherwise there would have been no economy, and he would not have adopted it. So there is still a net loss of employment to be accounted for. But we should at least keep in mind the real possibility that even the firsteffect of the introduction of labor-saving machinery may be to increase employment on net balance; because it is us ually only in the long run that the clothing manufacturer expects to save money byadopting the machine: it may take several years for the machine to “pay for itself.”

 

The most important part of that entire post.

 

To many of those manufacturing jobs are going to foreign countries.

Econ professor I have for intermediate macro was talking a lot about how a large portion of these positive numbers is seasonal adjustments and the fact that they still receive weight, despite the very mild winter we've experienced. Another large factor has been re-padding of Japanese demand/supply since the tsunami. Many firms scaled back largely as a result of that. Take it FWIW.