New salary overtime regulations

[frogger]

I do hope this new regulation actually works in your favor. Every company will have to figure out how to adapt and I'm sure they will have to take different routes depending on circumstances. 

 

 

 

 

Edited because I remembered it was way off topic and OP had a serious concern about her own situation. 

 

Edited May 31, 2016 by frogger

[EmseB]

In what way skewed? Both my husband and I have worked in the City of London, and Husband has worked on Wall Street, so we have seen silly salaries at close range and, although it shouldn't matter, I have an MBA from one of Britain's top business schools.

 

The Board remunerates the CEO and sets dividends based on the profits of the company. Those profits are subsidised by the taxpayer, because the company is not paying enough for the workers to survive and feed/house their children. Therefore, some portion of the CEO's salary and the dividend to shareholders is financed by the tax payers. If the CEO's salary were lower, the wages could be a bit higher, and my tax bill would be reduced.

I explained in my post, which you snipped. It's skewed to think that a CEO at whatever salary is responsible for the life choices of her employees. And it is mathematically dubious to claim that taking a salary cut, even to $0, would significantly increase the hourly wages of everyone else in a company that large. And that doesn't even touch on the fact the actual cost to employ someone is, in many cases, higher than their actual hourly wage.

 

I mean, the idea that your tax bill reflects high CEO pay as a net drain on society and people would not be poor if only they had a tiny, fractional bit of someone else's money? Again, this is an idea based in envy, not math or economics.

Edited May 31, 2016 by JodiSue

[Laura Corin]

I explained in my post, which you snipped. It's skewed to think that a CEO at whatever salary is responsible for the life choices of her employees. And it is mathematically dubious to claim that taking a salary cut, even to $0, would significantly increase the hourly wages of everyone else in a company that large. And that doesn't even touch on the fact the actual cost to employ someone is, in many cases, higher than their actual hourly wage.

 

I mean, the idea that your tax bill reflects high CEO pay as a net drain on society and people would not be poor if only they had a tiny, fractional bit of someone else's money? Again, this is an idea based in envy, not math or economics.

 

Not envy - fairness.  I don't envy people on gazillion pound salaries.  I do think that it's unfair that I should be subsidising them.

 

[SparklyUnicorn]

Can we talk about what slaves were actually paid and the standard of living slaves enjoyed in return for their efforts? I see comparisons like this, and I question whether one working a low wage job in America is paid worse than a slave.

 

I know conditions of slaves varied widely, but field workers in the Carolina often worked 15 hour days six days a weeks, ate cheap, repetitive food, and lived in cramped quarters with dirt floors. Even apart from the utter abomination that owning a human is, and just looking at working hours and conditions and what one 'earns' for that work, I question your statement.

 

I assume they weren't paid a dime.  But I assume they had to be fed, clothed, and housed at least to a level that would keep them able to work.  I don't think the comparison is a huge stretch at all.  No McD managers don't beat their employees (and to be honest most of them are slaves themselves).  The concept is, a small number of people are getting very very rich off the backs of very very low paid workers who are paid so low they can't afford to buy basics without outside assistance (that we all pay for which also enhances profits).  Some accuse those who question that as not understanding business and that it's not slavery.  We shouldn't put a stop to it (like we shouldn't have put a stop to slavery) because hey it's the American dream of large profits.  Too bad, so sad, that some people don't manage to be the owner instead (of the slave). 

[SparklyUnicorn]

And how do we reason this away?  Well hey those people should have done better in school.  They don't have to work at McDs if they don't want to. Nobody makes them.  Maybe they just don't know how to manage money. 

 

A lot of people take those jobs not because they dream of working at McDs, but because it might be one of the few jobs they can get for one reason or another.  They may have done quite well in school.  Doing well in school is not all there is to it. 

[SparklyUnicorn]

Nobody notices that the OP is worried about what is by comparison to a CEO a matter of penny candy money?  A regulation/law enacted to protect workers and be more fair in terms of how they are treated and paid for the work they do leads only to fear.  Is that another tactic of big business?  Keep people scared and desperate so they even reject to be in favor of a change that is aimed at being more fair to them? 

 

 

[SparklyUnicorn]

Not envy - fairness.  I don't envy people on gazillion pound salaries.  I do think that it's unfair that I should be subsidising them.

 

 

What's to envy anyway?  I wouldn't sleep well at night knowing I was making enough money to wipe my arse with while at the same time people under me had a hard time affording food (so I could be paid so much).

 

See this is why I suck at business.  I am not driven enough to care only about money.

[Greta]

Not envy - fairness.  I don't envy people on gazillion pound salaries.  I do think that it's unfair that I should be subsidising them.

 

 

 

THIS!  Absolutely!  These accusations of "sour grapes" and envy are grating.  First of all, these conversations don't tend to go well if you assume the worst possible motives of the people on the other side.  And secondly, it simply has nothing at all to with envy, it is about justice.  I advocate a higher minimum wage, but I'm not personally going to benefit from it.  I believe it is the right thing to do, that it would serve the greater good.  It's not about me at all.

Edited May 31, 2016 by Greta

[SKL]

I don't think windfall profits should be required to be shared with employees.  It depends on many things.  I think employees should be paid a fair wage for their work and whatever risk they may be taking.  Most people don't think employees should be taking any risks for their employers, but risk is the thing that ultimately leads to rewards.  Suppose people were willing to contribute in the form of a lower wage than the competition pays, but then qualify for profit sharing.  Great!  Profit sharing also makes sense for the employees whose efforts contributed to the reason profits are high.  For example, R&D folks, but not the floor sweeper.

 

Now if the employer decides to share with the employees, that is wonderful.  Every so often we see a heartwarming story like that.  But usually it doesn't happen in the same year as the business upturn; the early profits get reinvested for business growth and some is saved against possible future losses.  Delayed gratification - are employees willing to buy into that?

 

Now if I got rich because of something I invented and my employees are already getting paid competitive wages for what they do, I think I deserve to decide what I spend the windfall on.  Expanding the business / creating more jobs?  Paying a big bonus?  Supplying books to an inner-city literacy program?  Or how about donating to a great big wildlife preserve in Africa?  It should be my choice.  If that ticks off my employees or customers, they can vote with their feet or their pocketbooks.  (This of course ignores the massive tax implications, which would be different depending on how I decided to use the profits.)

[Greta]

I assume they weren't paid a dime.  But I assume they had to be fed, clothed, and housed at least to a level that would keep them able to work.  I don't think the comparison is a huge stretch at all.  No McD managers don't beat their employees (and to be honest most of them are slaves themselves).  The concept is, a small number of people are getting very very rich off the backs of very very low paid workers who are paid so low they can't afford to buy basics without outside assistance (that we all pay for which also enhances profits).  Some accuse those who question that as not understanding business and that it's not slavery.  We shouldn't put a stop to it (like we shouldn't have put a stop to slavery) because hey it's the American dream of large profits.  Too bad, so sad, that some people don't manage to be the owner instead (of the slave). 

 

 

I said that I don't think we should compare this to slavery, so I feel like I should explain.  I do strongly agree with your overall point, I just don't think it compares to the deplorable, nightmarish conditions under which slaves lived.  I've personally thought of it more like serfdom.  It seems to me like we're on a track back towards a 13th century type arrangement where a very few have abundance, and many who work for them have next-to-nothing.  What made America great in the mid 20th century was a strong middle class.  There were a lot of factors that led to that, like strong unions, higher (when adjusted for inflation) minimum wage, lots of manufacturing jobs that didn't require years of overpriced schooling but paid a livable wage, and probably many other factors that I'm not even aware of.  But those things have been and are being slowly dismantled and eroded.  The middle class is shrinking and if the trend continues, I fear we're going to be left with this huge divide between a few wealthy elite who own almost everything, and a large pool of cheap labor that will have no choice but to work for them for peanuts, just to scrape by on a subsistence-level existence.  It's like Feudalism version 2.0

 

I'm sure that many would say that I'm exaggerating and being ridiculous, and honestly, I hope they're right!  I would dearly love to be wrong about this.  But I have to call it like I see it, and that's the trend I see.

[hjffkj]

Nobody notices that the OP is worried about what is by comparison to a CEO a matter of penny candy money? A regulation/law enacted to protect workers and be more fair in terms of how they are treated and paid for the work they do leads only to fear. Is that another tactic of big business? Keep people scared and desperate so they even reject to be in favor of a change that is aimed at being more fair to them?

Umm dh doesn't work for a big business. I'm not fearful that his employer will purposely make things worse so they aren't financially hurt. They have proved time and time again that they would suffer financially to keep dh as an employee. but this regulation and how quickly the change is implemented drastically affects small businesses more than big businesses. All this CEO talk going on in this thread is not relevant to my situation at all so please don't use me as an example of big business employees.

[frogger]

A) It is irrelevant what you believe CEO's should make. What matters is how a minimum wage law would create unemployment among those who are low skilled or trying to get their foot in the door. The vast majority of studies show this would be the case. It also agrees with the basic supply/demand model. There are some papers that do say there is wiggle room to push wages up while not greatly affecting unemployment. There are dramatically less of them and they seem to be stretching things.

 

B) It is obvious to me that businesses who hire low skilled labor are doing an exchange for the service done not buying someone. Those of you who think so have some strange feudalist mindset. Do you really want businesses to own you? At some point that service isn't worth it. It is obvious that these businesses are subsidizing tax payers. Tax payers could be fully supporting these people and at this rate will be fully supporting more and more as people are priced out of the wage market.

 

C) Employees can be involved in profit sharing if they own shares in a business. Often employees get bonuses when businesses do well. If all employees must always share in the windfall than why do they not share in the loss. An owner can go years without pay, can go bankrupt and lose everything, and can take huge losses because an employee did something wrong. Think of that. The employee screws something up, gets sued, destroys a machine more expensive than his house and who pays for it? The owner. Really, I'm very glad my husband decided to be a safe employee. We had discussed going into business but the employee position is so much easier.

[Tsuga]

$27k in 1957 dollars is $231,383.15 in 2016 dollars.

 

http://www.dollartimes.com/inflation/inflation.php?amount=27000&year=1957

Just when I was feeling accomplished, LOL

[Greta]

I don't think windfall profits should be required to be shared with employees.  It depends on many things.  I think employees should be paid a fair wage for their work and whatever risk they may be taking.  Most people don't think employees should be taking any risks for their employers, but risk is the thing that ultimately leads to rewards. 

 

 

I get this, and I absolutely agree:  choosing to be an employee rather than an entrepreneur or investor means that I have the security of a regular paycheck.  And that reduced risk comes with a reduced potential benefit as well.  That's all perfectly reasonable, and as just as it should be.  The problem is, I think we've lost sight of what constitutes a "fair wage".  

 

This article is interesting, though I realize the numbers are a couple of years old.  http://fortune.com/2013/11/12/why-wal-mart-can-afford-to-give-its-workers-a-50-raise/

 

The company that my Dad worked for his entire life now pays it's workers about half of what they paid when he first signed on (in the 1970's), when adjusted for inflation.  They've also drastically cut back on benefits, vacation time, and pensions, and they've put their workforce on brutal rotating shifts.  All the while their profits have been increasing.  I understand that the employees get a very modest share of those profits.  But why they should get less and less while the profits go up and up is beyond me.  

[frogger]

You do realize that Walmart stores pay differently in different locations right? They are competing for employees in some places, minimum wage is different throughout the states, taxes and dealing with zoning is different in different locales. Any store that loses money rather than makes money is going to be shut down after awhile. I mean taking a few years of losses is different than realizing a particular store just isn't going to make money. This oversimplified math of the author of this article makes me think he knows nothing about business.

[EmseB]

Not envy - fairness.  I don't envy people on gazillion pound salaries.  I do think that it's unfair that I should be subsidising them.

 

 

Well, it helps that you aren't subsidizing them.  Again, they will contribute more to investments, new businesses, venture capital, development, philanthropy and the economy in general than you probably ever will (again, assuming you are not independently wealthy).  Taking away their salary isn't going to keep low-skilled workers with children off the dole, even if it does make some people feel self-righteous.

 

But, aside from that, since when has life been fair?  Really?

 

Trying to make everything fair probably isn't desirable for most people on this forum, because if you are in the first world your wealth is vastly disproportionate to 99% of the world and it isn't "fair" that you have food to eat every day and they don't.  Any attempt at making the world fair, if that's what an individual really wants, would be much  more believable if they gave up their creature comforts first and then approached the subject after working to make things "fair".  Which is pretty dang subjective in any case.

 

ETA: And yes, I've realized that you're not even addressing the content of my posts, I'm responding because math facts sometimes take for.ev.er.

Edited May 31, 2016 by JodiSue

[Tanaqui]

What matters is how a minimum wage law would create unemployment among those who are low skilled or trying to get their foot in the door. The vast majority of studies show this would be the case.

 

This is something we often hear, and it certainly is an interesting point of view, but is there really any truth to it?

 

Edited May 31, 2016 by Tanaqui

[ChocolateReignRemix]

A) It is irrelevant what you believe CEO's should make. What matters is how a minimum wage law would create unemployment among those who are low skilled or trying to get their foot in the door. The vast majority of studies show this would be the case. It also agrees with the basic supply/demand model. There are some papers that do say there is wiggle room to push wages up while not greatly affecting unemployment. There are dramatically less of them and they seem to be stretching things.

 

B) It is obvious to me that businesses who hire low skilled labor are doing an exchange for the service done not buying someone. Those of you who think so have some strange feudalist mindset. Do you really want businesses to own you? At some point that service isn't worth it. It is obvious that these businesses are subsidizing tax payers. Tax payers could be fully supporting these people and at this rate will be fully supporting more and more as people are priced out of the wage market.

 

C) Employees can be involved in profit sharing if they own shares in a business. Often employees get bonuses when businesses do well. If all employees must always share in the windfall than why do they not share in the loss. An owner can go years without pay, can go bankrupt and lose everything, and can take huge losses because an employee did something wrong. Think of that. The employee screws something up, gets sued, destroys a machine more expensive than his house and who pays for it? The owner. Really, I'm very glad my husband decided to be a safe employee. We had discussed going into business but the employee position is so much easier.

A.) Can you cite those studies? There are several I can think of (one by Paul Krugman was ground breaking at the time) that show that is not the case.

 

B.) I honestly have no idea what you are trying to say. How are these businesses subsidizing taxpayers? I think you misunderstand how labor markets work.

[Tanaqui]

Again, they will contribute more to investments, new businesses, venture capital, development, philanthropy and the economy in general than you probably ever will (again, assuming you are not independently wealthy).

 

Mmm, but distributing the wealth more equitably would provide MUCH more to "the economy in general" than the Waltons or the Koch brothers. When we give money to poor people, they tend to spend it - and spending is what makes the cash go around. When we give it to wealthy people, they tend to shove it in the bank, because you can only have so many gold plated toilets before it's silly. Which, you know, good for them, but it's not exactly boosting the economy.

 

As far as philanthropy goes, again, it's no substitute for an adequate social safety net - which means taxes, not charity.

 

Money doesn't trickle down. It trickles up.

 

But, aside from that, since when has life been fair?  Really?

 

Life's not fair, but you know what? You and I are thinking beings. At least, I am, and I assume you are as well. We have the capacity to make our society more fair. The only reason we don't do that is because some of us don't want to.

 

[SKL]

I get this, and I absolutely agree:  choosing to be an employee rather than an entrepreneur or investor means that I have the security of a regular paycheck.  And that reduced risk comes with a reduced potential benefit as well.  That's all perfectly reasonable, and as just as it should be.  The problem is, I think we've lost sight of what constitutes a "fair wage".  

 

This article is interesting, though I realize the numbers are a couple of years old.  http://fortune.com/2013/11/12/why-wal-mart-can-afford-to-give-its-workers-a-50-raise/

 

The company that my Dad worked for his entire life now pays it's workers about half of what they paid when he first signed on (in the 1970's), when adjusted for inflation.  They've also drastically cut back on benefits, vacation time, and pensions, and they've put their workforce on brutal rotating shifts.  All the while their profits have been increasing.  I understand that the employees get a very modest share of those profits.  But why they should get less and less while the profits go up and up is beyond me.  

 

Some industries were on an artificial bubble in the 1970s, so it is right that their wages and benefits went down.  Some of those industries and that bubble are responsible for much unemployment and recession, trade imbalance, loss of US competitiveness, poverty.  We can't ask employees to pay back the money they should not have earned in the first place, but at least we should stop the bleeding.

 

As for profits going up / wages not keeping pace, profits can be very different from cash flow.  If you've got a good thing going, it is often better to invest in growing/improving it vs. paying out the profits.  This increases longer-term security, which most employees want.  (That's assuming there is a good reason for profit sharing in the first place.)

[EmseB]

This is something we often hear, and it certainly is an interesting point of view, but is there really any truth to it?

 

Yes.  The data is pretty steadily showing yes.

 

Seattle's a pretty stark example where unemployment outside the city limits is improving, and yet it is increasing where the wage increase took effect in exactly the sectors where minimum wage is a factor.

 

But, I just read an article that basically says that job loss is okay. In other words, the people advocating for a higher minimum wage don't care about the casualties of people who might lose their jobs. Greater good and all.

 

Another WaPo editorial, with relevant quote (but the whole thing is a good, even-handed look at the idea of $15/hour):

 

The magnitude of that increase, however, is a matter for caution, given the widely varying labor-market conditions across the country and the likelihood that sharp mandatory wage hikes would reduce the supply of jobs. Also, the minimum wage is not an especially well-targeted way to help the working poor, because — unlike the earned-income tax credit wage subsidy — it benefits many workers who are not poor, not supporting families, or both.

 

...

 

The obvious risks — borne disproportionately by the very-low-income workers whom minimums are meant to help — are apparent even to advocates of the $15 minimum, as the many loopholes and caveats built into the California and New York increases implicitly demonstrate.

 

[Laura Corin]

Well, it helps that you aren't subsidizing them. Again, they will contribute more to investments, new businesses, venture capital, development, philanthropy and the economy in general than you probably ever will (again, assuming you are not independently wealthy). Taking away their salary isn't going to keep low-skilled workers with children off the dole, even if it does make some people feel self-righteous.

 

But, aside from that, since when has life been fair? Really?

 

Trying to make everything fair probably isn't desirable for most people on this forum, because if you are in the first world your wealth is vastly disproportionate to 99% of the world and it isn't "fair" that you have food to eat every day and they don't. Any attempt at making the world fair, if that's what an individual really wants, would be much more believable if they gave up their creature comforts first and then approached the subject after working to make things "fair". Which is pretty dang subjective in any case.

 

ETA: And yes, I've realized that you're not even addressing the content of my posts, I'm responding because math facts sometimes take for.ev.er.

Quoting you in full.

 

I actually agree with much of what you have said, which is why I have been going back to that one point.

 

Life is not fair, but we can strive for fairness, and look at the structures that underpin unfairness. It will always be imperfect, but it's worth doing.

[Tanaqui]

Jodi, you might not realize this, but the NY Post is not a reputable source.

 

Which leaves two articles from Investor's Business Daily. The Massachusetts information was interesting... though I have some questions about that graph, like "what's with that sharp dip in 2014?" and "where can I get more information?" and "is it possible that six months is not enough time to form a good picture of the lasting effect of this increase?"

 

But, I just read an article that basically says that job loss is okay. In other words, the people advocating for a higher minimum wage don't care about the casualties of people who might lose their jobs. Greater good and all.

 

Read the editorial, it doesn't actually say that.

 

Also, the minimum wage is not an especially well-targeted way to help the working poor, because — unlike the earned-income tax credit wage subsidy — it benefits many workers who are not poor, not supporting families, or both.

 

I fail to see how this is an argument against the minimum wage. "It helps some people who aren't poor as well as the poor, so...." So? It's bad? It's useless? It's a waste of time?

 

[Arcadia]

Umm dh doesn't work for a big business. I'm not fearful that his employer will purposely make things worse so they aren't financially hurt. They have proved time and time again that they would suffer financially to keep dh as an employee. but this regulation and how quickly the change is implemented drastically affects small businesses more than big businesses.

My cousins' small family owned business (manufacturing) have less than 30 employees on a 7 day work week. What happens when payroll cost is high compare to profits is that overtime is done by family members. My nephews and nieces are in their late 30s. They are free to work on weekends to run the machines and they know how to since they helped once they were teens since it is family business. There is very little hard labour as everything is automated where possible more for safety reasons (cutting and bending of hot metal which my grandpa and uncles did by hand with tools) than for saving on wages.

 

Also some profits go back to their business sinking day fund to cover dry times and rent hikes. One time the rent hike was so high that my uncle chose to move to a cheaper location. He did need to pay moving costs for machinery while extended family help moved the smaller items. He is 2nd generation middle class but there is no way he could absorb sudden costs even going without his own pay for a few months, without his business having a sinking fund.

[frogger]

Arcadia-  I grew up with family owned businesses. Though some are big enough and want to continue to help their employees my father has decided it is simpler to just run the business on his own with help from my mother so they down sized. Even though small businesses hire fewer in employees individually they do add up because there are so many small businesses. He of course, will be fine and can run a business either way but a person who can't start or run their own business now has a few less job opportunities. 

 

 

Tanaqui- Krueger and Card is the most touted one that claims there is no effect on employment and it is so pushed because it is one of a tiny sample that came to that conclusion. They did a study specifically on New Jersey and Pennsylvania while the more robust studies looked at states in varying levels of economic conditions. 

 

Here is a little article so I don't have to hash out the whole thing. http://www.frbsf.org/economic-research/publications/economic-letter/2015/december/effects-of-minimum-wage-on-employment/ since it is now well past midnight. It's a start at least. 

 

 

Also, when the studies are done they are done on very small increases. Yes, percentages are big when you are talking 4.25 to 5.05 (the wage change that the Krueger and Card research was based off of)  but really 5.05 wasn't a living wage and that wasn't going to get anyone out of poverty. When people talk about a living wage they are talking big leaps to $15 or even $20 an hour (currently). It is hard to imagine businesses, especially small businesses, surviving that. Do you think that it will have no affect at all even with large changes? If it doesn't than it would make sense to make it an upper middle class wage. 

 

I know the teens that work for minimum wage will benefit but I do wonder how the calculations will work out for the adults living in poverty. Do they lose any benefits? I know each state has different calculations and it would be complicated to figure out each one but if they are losing benefits while their co-workers are losing jobs than I can't count that as a win. It is much easier to move to a higher paying job when you already have recommendations and are working than when you have no work experience at all. So making it harder to get your foot in the door is not all that helpful. 

 

A business is not a feudalistic Lord. It is an exchange of labor for money. To make a business completely responsible for people they have no control over (unlike feudal lords) is absurd. A subsidy is a payment that encourages something to produce more of it. If you got rid of all welfare, food stamps, low income housing, medicaid, and what not it wouldn't make a difference on whether it was worth while for some business to hire someone for $7.25. Either they need it done for that price or they don't. Taking away all those benefits will not make the business worse off. You will make people who need the benefits worse off. It is better to let prices do their job and to support other programs or benefits to help the poor. 

 

 

 

 

 

 

 

 

 

[eternalsummer]

The economic argument is one thing; on the whole it seems to me like a matter of the relative bargaining power of labor vs. capital; right now there is a surplus of labor, so wages are stagnant because there is not enough pressure to raise them.

 

The moral argument is another thing and tbh I don't understand it at all.

 

The way Walmart makes money is not from cheap labor of cashiers and stockers.  They are not primarily a service industry.  They make money by buying cheap things and selling them for a lot more or by having things made cheaply in places where labor is much cheaper than it is here, right?

 

So if someone is campaigning for Walmart to pay its entry=level employees $15/hour as a *moral* matter (that is, because they are human and deserve a certain standard of living relative to the CEO of Walmart), then I don't see why that only applies to American employees and not also the third world workers who produce the goods?

 

What the minimum-wage-raisers are really demanding is a bigger share of the profits, and those profits come from the exploitation of cheap labor in the third world.

 

They may have an economic argument, but the moral argument is absolutely meritless and hypocritical.

 

For a place like McDonalds, which is a service industry, the way they make $ (primarily) is by exploiting animals in factory farms.  Again, the minimum-wage-raisers are just insisting on a bigger share of the profits of that exploitation.

[eternalsummer]

And all that said, we pay a living wage (plus, actually) for work that doesn't require even a high school diploma - because we want employees who will stay with us long term, and to be honest we want a person to be able to support his/her family without government assistance.

 

What I don't quite get about a living wage is that they calculate it (and we pay) as if the person working is the sole wage earner for a family.  But at the same time, most people who advocate a living wage also say that women and men should both be in the workforce en masse.

 

So really, if there are two wage earners, wouldn't they each only need half the living wage?  And if not, shouldn't we be encouraging half the workforce to stay at home (which, incidentally, would probably drive up wages a fair amount on its own). 

 

I dunno, it just seems like the system has some inherent contradictions.

[regentrude]

While I agree with many points made on this thread, this

 

When we give money to poor people, they tend to spend it - and spending is what makes the cash go around. When we give it to wealthy people, they tend to shove it in the bank, because you can only have so many gold plated toilets before it's silly. Which, you know, good for them, but it's not exactly boosting the economy.

 

is a tad simplistic. "Money in the bank" is not gold bars in a safety deposit box.

Rather, the money is invested; it buys shares of companies and puts capital into the company; it is lent to business owners to start or expand their business; it is lent to homeowners as mortgages ... all this money works in the economy and does not simply sit in the rich person's box. 

The availability of funds for loans is a huge contributor to the economy.

 

Edited June 1, 2016 by regentrude

[EmseB]

Quoting you in full.

 

I actually agree with much of what you have said, which is why I have been going back to that one point.

 

Life is not fair, but we can strive for fairness, and look at the structures that underpin unfairness. It will always be imperfect, but it's worth doing.

 

Yes, but you think it is fair to confiscate the wealth of someone who makes above "x" amount, in the name of fairness.  I don't think that is fair. I think it's simply greed and envy.  It is coveting in the most basic sense.  I think if someone wants to be ambitious and has the energy and risk-taking personality to go for the big bucks, then more power to them because I certainly don't.

 

I also disagree that fairness (in terms of wages) is something to strive for. I think it's actually detrimental to society to try and make everyone's wages more equal simply because some people have more and some people have less.

[EmseB]

While I agree with many points made on this thread, this

 

 

is a tad simplistic. "Money in the bank" is not gold bars in a safety deposit box.

Rather, the money is invested; it buys shares of companies and puts capital into the company; it is lent to business owners to start or expand their business; it is lent to homeowners as mortgages ... all this money works in the economy and does not simply sit in the rich person's box. 

The availability of funds for loans is a huge contributor to the economy.

 

Exactly.  Rich people that get rich don't do so buy installing gold toilets (although someone has to be hired to do that work, too, so it is money in the economy).  They have figured out successful ways to invest their money in the economy.  Even tax shelters and all of the things people complain about are vehicles to earn interest and in order to do that the money has to be lent out to people like, say, my dad who wanted to buy a franchise 20 years ago, or home buyers (real estate funds), or venture capital investments, or bio tech, or SpaceX, or, or, or. And, none of these investments are guaranteed.  People lose money doing this stuff all the time. 

 

It amazes me how many people think rich people are like Scrooge McDuck with a big pile of gold coins in a room they like to dive into and swim around it.  Sure, they might be frugal or whatever, but their money isn't under a mattress.

[ChocolateReignRemix]

Arcadia- I grew up with family owned businesses. Though some are big enough and want to continue to help their employees my father has decided it is simpler to just run the business on his own with help from my mother so they down sized. Even though small businesses hire fewer in employees individually they do add up because there are so many small businesses. He of course, will be fine and can run a business either way but a person who can't start or run their own business now has a few less job opportunities.

 

 

Tanaqui- Krueger and Card is the most touted one that claims there is no effect on employment and it is so pushed because it is one of a tiny sample that came to that conclusion. They did a study specifically on New Jersey and Pennsylvania while the more robust studies looked at states in varying levels of economic conditions.

 

Here is a little article so I don't have to hash out the whole thing. http://www.frbsf.org/economic-research/publications/economic-letter/2015/december/effects-of-minimum-wage-on-employment/ since it is now well past midnight. It's a start at least.

 

 

Also, when the studies are done they are done on very small increases. Yes, percentages are big when you are talking 4.25 to 5.05 (the wage change that the Krueger and Card research was based off of) but really 5.05 wasn't a living wage and that wasn't going to get anyone out of poverty. When people talk about a living wage they are talking big leaps to $15 or even $20 an hour (currently). It is hard to imagine businesses, especially small businesses, surviving that. Do you think that it will have no affect at all even with large changes? If it doesn't than it would make sense to make it an upper middle class wage.

 

I know the teens that work for minimum wage will benefit but I do wonder how the calculations will work out for the adults living in poverty. Do they lose any benefits? I know each state has different calculations and it would be complicated to figure out each one but if they are losing benefits while their co-workers are losing jobs than I can't count that as a win. It is much easier to move to a higher paying job when you already have recommendations and are working than when you have no work experience at all. So making it harder to get your foot in the door is not all that helpful.

 

A business is not a feudalistic Lord. It is an exchange of labor for money. To make a business completely responsible for people they have no control over (unlike feudal lords) is absurd. A subsidy is a payment that encourages something to produce more of it. If you got rid of all welfare, food stamps, low income housing, medicaid, and what not it wouldn't make a difference on whether it was worth while for some business to hire someone for $7.25. Either they need it done for that price or they don't. Taking away all those benefits will not make the business worse off. You will make people who need the benefits worse off. It is better to let prices do their job and to support other programs or benefits to help the poor.

You are incorrect regarding Krueger and Card. They studied both national and local minimum wage increases. Studying state increases is particularly useful as it allows you to control for more variables.

[ChocolateReignRemix]

While I agree with many points made on this thread, this

 

 

is a tad simplistic. "Money in the bank" is not gold bars in a safety deposit box.

Rather, the money is invested; it buys shares of companies and puts capital into the company; it is lent to business owners to start or expand their business; it is lent to homeowners as mortgages ... all this money works in the economy and does not simply sit in the rich person's box.

The availability of funds for loans is a huge contributor to the economy.

Except money "invested" doesn't always go into capital either.

[momof4inco]

 

Also, when the studies are done they are done on very small increases. Yes, percentages are big when you are talking 4.25 to 5.05 (the wage change that the Krueger and Card research was based off of)  but really 5.05 wasn't a living wage and that wasn't going to get anyone out of poverty. When people talk about a living wage they are talking big leaps to $15 or even $20 an hour (currently). It is hard to imagine businesses, especially small businesses, surviving that. Do you think that it will have no affect at all even with large changes? If it doesn't than it would make sense to make it an upper middle class wage. 

 

How does the raise in minimum wage affect those that make more than minimum wage? My husband works in the insurance industry. He had to get licensed, in multiple states, in order to do his job. His job requires specific skills and knowledge, and he has worked hard to make sure he is good at his job. He gets paid a fair wage for his skills compared to the wage of someone with no job skills. That would change if the person with no job skills gets bumped to $15/hour.

 

Does it de-value his wage if someone at McD's makes $15/hour? Does his company give him a raise because his skills are worth more than the typical entry level McD's worker? If they don't give him a raise, the raises for unskilled workers will increase costs and our ability to live on a previously livable wage is taken away. We aren't rich - we have a child with special needs and another child with diabetes, we are killed every month by medical costs.

 

If not everybody gets a wage increase because minimum wage goes up, doesn't that make the situation worse for people who are not at poverty level? Prices will go up with a $15/hour minimum wage. If I'm a business owner and my wage costs go up, I have to make up the lost profit by cutting hours, increasing costs, or both.

 

In all of the articles I have read about the minimum wage increase, I haven't seen this addressed. It's a big concern for us.

[frogger]

Momin4inco

 

It is very hard to control for all variables but a variety of things can happen.  

 

A) What people who support minimum wage usually want or intend to happen can happen for some businesses. Labor costs more but the product won't sell for more but they can take it out of profit.

 

B) They will start losing money and must cut labor costs through machines or efficiency on the line or something of that nature.

 

C) They increase the cost of a product and the people continue to want the product so consumers pay the higher cost. 

 

D) They increase the cost of a product and so people buy less of an item therefore they need less workers and there are lay offs. 

 

 

 

Some products can go up in price but obviously every price can't go up without people buying less. They won't be able to afford everything at double the price so regardless there has to be some  combination of A,B, or D going on. Some items will be able to handle C happening just not everything. Economists refer to price elasticity when they speak of how much something can change in price without people buying less.  If there isn't a lot more money in circulation (inflation) than C simply can't happen to all goods. Does that make sense?

 

 

Because every business is different your whole economy will probably be a combination of the above things happening. Large businesses will of course have an easier time shifting assets quickly and have more capital to invest in machines. There is also a difference when it comes to new businesses that will design their business plan around the new labor price and businesses that already exist or as some people call it have the costs "baked in". 

Edited June 1, 2016 by frogger

[poppy]

Yes, but you think it is fair to confiscate the wealth of someone who makes above "x" amount, in the name of fairness. I don't think that is fair. I think it's simply greed and envy. It is coveting in the most basic sense. I think if someone wants to be ambitious and has the energy and risk-taking personality to go for the big bucks, then more power to them because I certainly don't.

 

I also disagree that fairness (in terms of wages) is something to strive for. I think it's actually detrimental to society to try and make everyone's wages more equal simply because some people have more and some people have less.

 

Have you read any of the arguments in this thread about the benefits to our economy that come with a having less starkly divided income levels? No one , absolutely no one , is arguing that it should happen 'because some people have more and some people have less'. It is a practical suggestion based both on economic theory and on empirical data .

 

As for confiscating wealth , I know some people don't think income taxes are reasonable. Most of us don't. At the very least I'm sure you'd agree that confiscated wealth to pay for a dense force, interstate highways , food safety , having a mail system, etc is worthwhile.