Minimum wage only helps poor, does not raise inflation

The GDP is 11 trillion dollars. If we DOUBLED the minimum wage it would only cost another 50 billion dollars a year. So, inflation would go up 0.45%, while their wages would go up 100%.

As it is right now, a full time worker making minimum wage gets paid 10,000 dollars a year. That won’t even cover rent. It is ridiculous. Doubling it would make it 20,000 dollars. However, raising it by 50% to around $7.50 would still only pay 15,000 dollars a year, but it would only raise inflation by 0.23%.

And for reference, inflation went up by nearly 6% last year alone, all on its own.

The inflation argument only benefits people who don’t want to pay more for their workers. The problem is that when everyone pays their workers so little, their workers can’t afford to shop at anyone’s stores.

Make sure to tell anyone who repeats that “minimum wage increases inflation” that they are misinformed.

Increasing the minimum wage decreases poverty and increases the quality of life of more than 7 million Americans who already work full time at minimum wage. Plus the millions of other workers who are getting paid between the minimum wage and $7.50 would also get some much needed relief.

http://www.epinet.org/content.cfm/issueguides_minwage_minwagefaq


Am I right?

Doubling the minimum wage is the LEAST we can do, but it would at least get people who work full time above the poverty line.

These people are the majority of us. They will spend their money, creating demand for goods and services that is simply not there now. This will create JOBS, folks, something Stupid's tactic of fattening the rich has not done. It will also increase REVENUES, reversing some of the disaster Stupid's reckless tax cuts to the rich caused.

When did a poor man ever give you a job? When he needed something you made and had the money to pay for it, that's when.

something here. If we double the min. wage what about all those people now paid at point a point between the current Min. wage and the new rate. It would seem to that their wages would also go up, what am I missing here.

the last time they raised the minimum wage, I also got a raise.
I made more than the minimum but my company gave us all a raise.
Everyone got bumped up! :)

The minimum wage is meant to be a wage floor for marginal workers who do all the low paid, dirty, and utterly necessary jobs to keep them out of the poverty they've been allowed to slide into now.

Everyone paid less than the new minimum would still go up to the new minimum wage.

As the other poster mentioned, workers who are paid slightly above minimum are often bumped up so that their new wage is still above minimum. This is done by smart employers who want to retain their trained staff.
The bump-up effect doesn't go that far above minimum however -- it's usually held to the workers making less than 125% of minimum IIRC correctly.

economy much more than any tax cut. The wealthy have already purchased anything they want so giving them more disposable income will not generate more economic activity.

Minimum wage earners on the other hand will immediately put the money back into circulation by buying things with it. Those things will have to be replaced on the store shelves, so manufacturers have to build more and so it works up the economic food chain all the way to the wealthy who own stock in those stores and manufacturers.

It's trickle up, stupid . . .

that we create more taxpayers, and thus lessening the tax burden on everybody,not to mention more buying power, more savings, more investment, but I guess that is Utopia. Even the CEO of Wal-Mart admitted he wanted to see the minimum wage increased.

Here's the article.
http://money.cnn.com/2005/10/25/news/fortune500/walmart_wage/

If any big retailer comes out against it, sell the stock immediately because they won't be very successful.

DUers don't shop at Wal-Mart. But somebody does...:think:

A minimum wage earner is going to take his increased wages to the nearest Wal-Mart and grocery store.

starting making the model T and there weren't enought people with enough money to buy what they could produce so ole Henry started paying his workers 5 bucks a day an unheard of amount in that day. Yes it trickles up. shit rolls down hill and that is what * tax policies are, Shit.

This non-partisan report (Sirota cited to publicly smack down Stossel in this argument quite recently)is available to all in pdf and html.

Fight back with the data and hard facts.

http://64.233.187.104/search?q=cache:NJPRl3MAmpgJ:www.fiscalpolicy.org/FPISmallBusinessMinWage.pdf+fiscal+policy+institute+minimum+wage&hl=en&gl=us&ct=clnk&cd=1&client=firefox-a

http://www.fiscalpolicy.org/FPISmallBusinessMinWage.pdf

When and where was the smack-down of Stossel by Sirota? If anybody ever needed smacking down (on a multitude of issues), it's John Stossel!

Of course the truth is that Republicans really don't care about the economy as a whole. They only care how the members of their true base, the uber-wealthy, fare.

But millions of sub-uber-wealthy voters care quite a bit about wages!

David Sirota Shreds John Stossel’s Misleading Claims About the Minimum Wage
Topic started by Omaha Steve on Jun-20-06 05:46 PM (8 replies)
http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=132&topic_id=2688090

Others on the meltdown:

David Sirota: John Stossel is a pathological liar
Topic started by Wetzelbill on May-31-06 03:34 AM (31 replies)
http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=103&topic_id=214278

Video of David Sirota beating down John Stossel
Topic started by Wetzelbill on Jun-18-06 04:00 PM (14 replies)
http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=364&topic_id=1454358

Video: David Sirota confirms John Stossel's a "smarmy-looking liar"
Topic started by Human Torch on Jun-18-06 07:21 PM (12 replies)
http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=132&topic_id=2685321

Debating A Pathological Liar on CNBC by davidsirota (Kos post)
Topic started by ProSense on Jun-17-06 03:01 PM (13 replies)
http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=132&topic_id=2683716

We could use an army of Sirotas out there on the issues every night.
EVERY night!

I watched the video. When Sirota pointed out that states raising the minimum wage above the federal level created more jobs, Stossel had absolutely no response. The guy just doesn't deal in facts.

Sirota is excellent. He is totally armed with facts, stays focused, does not back down, and speaks in a clear, direct way. I'm going to have to get his book.

Confessions of a Welfare Queen: How rich bastards like me rip off taxpayers for millions of dollars by John Stossel http://www.reason.com/0403/fe.js.confessions.shtml

keep this thing kicked.

Exactly, pay people more, and they can buy more. Money moves around and you have a healthy economy. If you want a really healthy economy those people should buy more from smaller "mom and pop" style stores (where and if they exist in your area). The economy is like your circulatory system, when things are moving around it's good, when things are getting stuck in certain spots (like the defense and oil industries) not good... if all the blood is going to the top, you're going to have an aneurysm.

interresting to see the poverty line vs minimum wage

Here is a great article: <http://pewresearch.org/obdeck/?ObDeckID=18>

Here's an excerpt:

"By an overwhelming margin (83% to 14%), the American public favors raising the federal minimum wage to $7.15 per hour -- a hefty $2.00 an hour increase. And nearly half (49%) say they strongly support such an increase. While there are differences in the extent of support across political and socioeconomic lines, raising the minimum wage receives widespread support from both Republicans and Democrats, wealthy and poor.

... In the 30 states where the federal $5.15 minimum applies, 82% say they support a $2-increase to $7.15, while just 16% are opposed. In states where a minimum wage of $7.15 or more has already been passed, 88% are in favor, a difference that is not statistically significant.

Democrats express more support for minimum wage hikes, but the gap between Democrats and Republicans is relatively small in this era of intense partisanship. Raising the minimum wage by two dollars to $7.15 is nearly universally supported among Democrats – 91% favor the idea and just 8% are opposed. Independents agree by an 87%-to-11% margin. A larger proportion of Republicans (24%) opposes an increase to $7.15, yet still 72% are in favor."

Here are a few more charts:

:kick:

when the government stimulates the economy, basic economics tells us that there's a multiplier effect as those dollars injected into the economy pass from hand to hand in more so that each dollar might participate in, say, five new transactions instead of just one.

this is one of the many things that has been so unbelievable idiotic about shrub's tax cuts for the rich. the tech bubble was created because there was an overabundance of capital and too few places to invest, so stocks got overinvested. when the bubble burst, people took their money out but were left searching for new investments and they found it in india and other offshore locales.

so when the government hands out money to the rich, the multiplier effect happens, but it happens in india. when you give the poor a break, they very much tend to spend the money locally, keeping the multiplier effect in america.

“The United States of America of 1968” featured a minimum wage of $9/hour (at half of today’s labor productivity!) – scheduled to drop in future years (if we had had a crystal ball) to $8/hour by 1974, $7/hour by 1981, $6/hour by 1991 and $5.15/hour by today (which remits the same take home amount as the untaxed $4/hour minimum of 1939). http://www.purpleocean.org/node/10693

http://oregonstate.edu/instruct/anth484/minwage.html

It's what so many of us, and so many we know, intuitively know and feel, but sickenly, it's not getting said or acknowleged anywhere that it counts!

make it legal to pay LESS than the current minimum wage, they already think that a family of 4 living on 10,000 a year earns too much money. As Frist said "I could live on 5.15 an hour if I had to."
Basically the GOP has decided that American workers need to earn the same amount as third world workers, 1-3.00 a day. (overgeneralizing here, but you get the point.)
That is what they are working for, and it is coming quickly.
6 million more people live in poverty since Bush took power.

As Frist said "I could live on 5.15 an hour if I had to."


Prove it.

YEAs ---52

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I believe every Democrat voted for this, even so-called DINOs. On the issues that count, we can count on the Democrats.

/ centrists that this is a good issue for election season.

Kennedy has promised to re-introduce it as soon as we take some more Senate seats. It will be tough to get a net gain of 8 though.

I'm confident we'll take the house by storm. There's a lot we can do when good liberals like Conyers and Kucinich are in leadership positions.

and they buy American or at least try to. No Porsches or European vacations for these folks. Raising the minimum wage now will have a small effect on employment because employers will have the notion that labor costs are higher, but.....it will have tremendous growth in our domestic economy by way of increased consumer spending and additional sales tax revenue.

When poor people get money, they spend it. When rich people get money, they save/invest it, or spend some on luxuries and imports.

Everyone does better when everyone does better.

. .. i have done, as have plenty of others in the analytic school, statistical models to PROVE what you say is true. There is not a single case, in any country with a modern economy, of ANY type, in which a raise in the wage floor caused ANY negative economic consequences.

Not inflation; not reduced growth; not lower employment; not monetary devaluation; nothing! Even when Brazil instituted one during the hyperinflation period, the economy stabilizes a few months later. So, obviously an economy in chaos was not made worse by an increase in the wage floor. And while our economy is not very robust right now, it's not in the chaotic state as was Brazil's at that time.

The history is abundantly clear. It does not have negative consequences. Now, i'll admit that since nobody has ever tried to raise the MW by 100% at one swipe, we don't know where the outer edge is. But, with the incremental increases we've seen over the past 75 years, there appears to be no cause and negative effect relationship. Not that conventional economists would agree, mind you.
The professor

some small business just wouldn't be able to afford it. All those little mom&pop businesses that the big businesses are trying to run to the ground... this would be an extra little push in that direction for a lot of them. Raising however, obviously a good idea (and necessary, IMO). It hasn't been raised since what... late 90s? And inflation and expenses have sure as hell gone up since then.

Make sure to tell anyone who repeats that “minimum wage increases inflation” that they are misinformed.

Yeah... those people have it backwards. Inflation needs that you need to raise minimum wage to keep up. Smack them upside the head when they tell you this. Just on principle.

Companies will falling overthemselves to hire them and undercut the minimum wage. Just like now.

not everything is about immigration

So if we were to follow your idea. Lets LOWER the minimum wage so that companies will not have any reason to hire illegals because they will just get paid the same anyway...

???

Just ignore the fact that it will cause workers FROM THIS COUNTRY to suffer. Look, the point isn't to "stop immegration", but to help the legal workers who are here.

may result in an increase of pay for some, but it will also mean a decrease or loss of job for others. And unfortunately, there are more factors at play than just the wages people earn. For example the destruction of the dollar.

back that up, show me some data, because every source I have read says otherwise. Loss of jobs may occur, but you can't overlook the "magnitude" of effect. For example, doubling the minimum wage may decrease the number of jobs 0.00001%. While that technically means that the "minimum wage resulted in job losses," it doesn't mean that it wasn't of benefit to everyone. Not to mention how many jobs will be INCREASED because people will be able to go to working ONE JOB instead of TWO JOBS. So we could actually see an increase of jobs as far as unemployment is concerned.

As far as the value of the dollar is concerned... like I said in the OP, inflation went up 6% last year all on it's own. It is insane to blame that on the minimum wage.

I must re-evaluate my theory. Hmmmm, do you have a link or two to the sources which state otherwise?

http://www.epi.org/content.cfm/webfeatures_viewpoints_slayers

http://www.washingtonmonthly.com/archives/individual/2006_06/009055.php

http://online.wsj.com/public/article/SB115076184109284666-b2R8VvX__gGSI93ezv2e98eIwTs_20070619.html?mod=blogs
(which shows the opposite - "National Federation of Independent Business, which represents small companies -- says a quarter of its members would have to cut jobs, at a total loss of 217,000 positions") - so not every source, but it would be expected from an organization dedicated to businesses that they would be cautious

http://www.epinet.org/content.cfm/issueguides_minwage_minwagefaq

. . .that refute your hypothesis. Go to your nearest college library and look through their stacks of economic books, journals, and papers.

You will find something somewhere (the issue has been explored by hundreds of econ folks, including me for my first paper back in the late 70's) that shows that this hypothetical is untrue.

There is nothing in the historical data of any industrialized country that shows any negative influence (statistically significant) on employment levels when the statutory wage floor is raised.

You go look. I guarantee you'll find something. The reason is that guys like me were influenced to this kind of work when we were young and it so smashes conventional wisdom, so we assigned this sort of work to others later on. As a result, tons of people have had this as a research project.
The Professor
The Professor

I'm very aware of my limited knowledge concerning economics.

The problem with a minimum wage is that it mandates employers to pay more than the labor is worth. These jobs are prime candidates for abusing illegal immigrants, so that the cost of labor is in closer relation to its benefit; in other words, it provides an incentive for employers to escape the system.

The best way I've seen for dealing with this problem involves the elimination of the minimum wage (gasp shock horror), and instead providing a wage subsidy from the government to raise the income of every family up above the poverty line (he also argues for a better calculation of the line as well as things like universal medical care and a means-tested education subsidy).

If you're curious, it's from a book one of my former profs wrote, Capitalism with Morality. It's a bit dry, but still interesting.

the abuses would be unstoppable

1. Your telling me that anyone's hard labor full-time for a year is EVER worth less than 10,000 dollars. I don't believe it.

2. OR we could just enforce the laws to provide incentive to not higher illegal workers. We could solve the illegal immigration problem too. We could do all kinds of things, but to advocate taking away protection for the worst paid workers (LEGAL) in the country... now THAT would hurt workers more than illegal immigration has ever hurt workers.

Maybe we should step back for a moment and try to figure out better solutions.

floating in Cash these days and cannot find a stock or an idea worth investing in.

Hmmmm.

nm

they can't find any..I don't know. With middle class not paticipating fully in economy.. there is no want to fill.

You should read that article. Very interesting. I think it talks about the utility of money. And how tax cuts should go mostly to the poor and middle class. Cause they'll spend or invest it all. All of it.

I guess they import stuff or buy homes abroad. I don't know really.

Some even go so far as philanthropy. But I doubt most of the tax cuts the rich got went to philanthropy.

1) putting more money into the hands of people who are more likely to spend it improves the economy, and that increase in economic activity has the potential to drive up inflation.
2) raising the minimum wage $1.00 probably wouldn't cause major business failure, but doubling it?.... I don't know.
3) it would definitely provide greater incentive for additional outsourcing and illicit hiring of illegals.
4) raising the minimum wage would not necessarily raise the GDP proportionately, more likely it would be affect the distribution of that gdp.

I agree with raising the minimum wage, but it'd be pointless to double the wages of 7 million US workers without first getting a handle on the undercutting effect of 12 million illegals.

see posts 33 & 35

(1 - by the way increased economic activity is A GOOD THING)
(2 - I don't think we should double it, but 7 or 8 or maybe 9 would be good)
(3 - Sounds kinda like, "don't make laws because bad people will just find a way to get around them" also, see posts 33 and 35)
(4 - Well, the truth is that it is such a small amount that it would probably have little effect either way.)

"..increase in economic activity has the potential to drive up inflation.."

I like how people throw out canards like "increased economic activity has the POTENTIAL. . .".

Well, duh! Unfortunately, there is zero evidence in the econometric data to support that the tiny increase in growth generated by incremental improvement in the S.W.F. leads to inflation.

It's a wild hypothetical with no basis in fact.

You're post title is perfect! I guess we don't WANT the economy to grow, since it could cause inflation.

Good one.
The Professor

Should have not assumed everyone knew the acronym. My fault.
The Professor

Is it an American term or an academic term? I find it strange that through all my undergrad I have never heard it.

The point is that inflation is often incidental to increased economic activity. To say that raising people's standard of living won't increase inflation is misleading.

People's standard of living should improve, and inflation is the acceptable risk.

There is no proof of that. It's a two dimensional canard from the first week of Econ 101. Unfortunately, almost nothing in the macro world works like Econ 101 says. Almost NONE!

There is no proof in any historical data in the industrialized economies that an increase in the wage floor increases upward inflationary pressure. None.

Don't through out these canards as if they were facts. They're hypotheticals at best, and have been proven to be untrue.
The Professor

It's all pretty logical, really.

If you double the salary of people who don't have enough in the first place, they are going to be spending the extra money on items of necessity- i.e., food, healthcare, housing, transportation. The pool of money being spent in these areas is going to grow larger.

If the pool of money being spent on necessities grows larger, it WILL raise the prices of the items in that group. For those necessities, the value of money will go down.

The effect of a minimum wage increase would depend largely on how much it was increased, and how many people would have their wages raised by it. Doubling it would certainly have an effect on the prices of everyday items- pushing and pulling- although it may not cause more generalized inflation of our currency, especially if the rich don't take steps to counter and maintain their current standard of living.

This is the third time someone tried to give me an Econ 101 lecture when i asked for evidence that this "logical" hypothetical is true.

I've yet to see any proof. And the reason is, that economists have known for 30 years that this doesn't really happen. So, your logic falls flat in that despite what appears to be logical, the effect you describe does not occur!
The Professor

Excuse me for disputing you, "Professor." Your proof of the negative is thorough and clear.

Increasing pools of money DOES cause inflation. That is not theory. It is a fact. The examples are plentiful. The supply of money itself matters.

If that WASN'T a fact, we'd just print out an endless supply of money and we'd all be rich. Are you disputing that it's bad monetary policy to print out an endless supply of money?

If you have a larger pool of money being used to buy a certain group of goods, the prices on those goods will go up. Therefore, the prices of necessities would go up with a doubled minimum wage.

Like I said, it's logic. Literally.

At some point in time you will realize that a hypothetical that doesn't actually occur is irrelevant. I am telling you that the result you propose from your "logic" has never actually happened when it applies to the wage floor.

First of all, increasing the wage floor does NOT add money to the system. It increases the velocity of money, yes, but as that demand rises, the supply of staples only fails to increase if ALL suppliers in that industry are at 100% capacity. So, productivity rises, obviating the increase in price. This is what happens almost all the time.

Now if you could show me evidence that the ONLY way to increase the minimum wage is to print more money i'd be happy to look at it. But, an increase in goods to go along with that increased demand satisfies both sides of the economic equation.

And, you're not using logic. You're applying a syllogism. To whit: Printing money creates inflation; increased wages MAY cause inflation; increasing wages means printing more money. That's not logic. The two are not the same thing. Price inflation and monetary inflation are two separate things. The former is microeconomic, the latter macroeconomic. You can impugn my credentials all you want, but if you don't know this distinction, your negative opinion of me doesn't hurt much. Your basis of insulting me is pretty weak, and therefore the insult becomes inconsequential.

Now, where is YOUR evidence that we're printing more money? We're not! The M1 hasn't changed by anywhere near the amount of the GDP's nominal growth. The M2 has barely changed at all, and long term, non-liquid cash is what's changing, by the amount that the Silverspoon's minions have borrowed money. (Or looted the treasury.)

So, you make the assumption we're printing all kinds of money. There's no evidence of that. You're assuming the only way to raise minimum wages is to print more money. There's clear evidence that this isn't necessary. (Look at the last 50 years, for goodness sake. The M1 doesn't always grow by the rate of growth or the rate of inflation. The entire 90's prove that!)

And, you're assuming that all production in this country and every exporter is at 100% meaning the quanity of goods can't rise to meet the increased demand. Remember, there is a point of dminished return on goods made if they're not all being sold. So, companies don't make goods they can't sell. If they can sell more, and they're at 80% capacity, they make more, since the marginal return is actually BETTER on that last 20% of production. You have left that out of your equation.

So, like i said, it's not logical. Literally! You've left out too many variable for it to be a logical conclusion.
The Professor

If I currently have people working for me at 10 bucks an hour, say double min wage. Federal min wage doubles to $10.30 per hour. I will have to increase the wages of my employees. And I would do this for 2 reasons. first, they are not minimum wage employees. 2. In order to keep good employees I have to pay them what the market demands. If all of a sudden the market price shoots up because there are positions tied to minimum wage rates, then I have to compete in the market place for employees. The way I win is to offer higer pay.

Now, how do you suppose I pay for this? My prices go up. If I am operating on a fixed profit margin of say 2% of COGS, with fixed costs included in COGS, and one of my fixed costs goes up, well to keep that 2% margin (which is low in any business) I raise prices. I can only assume that my suppliers will also raise prices.

And do please remember, that just because a company pays someone 10 bucks an hour, that the cost of that employee is 10 bucks an hour. As a owner, I am responsible for costs above that 10 bucks, such as empolyeer contribution to SS, FICA, Unemplyment insurance, heath insurance, workmens comp, dental. I can only assume all of those costs will also increase. So an increase to $10 per hour may be $15 per hour for the employeer.

Not saying raising minimum wage is wrong, but it is not as simplistic as just pass a law. There will be consequences in the % employment numbers, job growth and business expansion.

They had June O'Neill on as an economic expert, regarding the minimum wage issue.
What a total bitch!
http://zicklin.baruch.cuny.edu/faculty/profiles/oneill.html

She said that minimum wage earners are low educated and have "low productivity"!
This was after she named jobs such as house cleaning, maids, dishwashers, gardeners,
manufacturing workers, waitresses etc., etc., etc.
Said they didn't "deserve" a raise in their minimum wages! omg!
She was sooooo rude!!! Such a snob! Uppity byotch!

Soooo pig like!! Total Corporate Swine!!!


'Support Corporate Swine!! Make your own stickies and pass them out to deserving pigs!
:rofl:

http://www.corporateswine.net/corpies.html







What a friggin' riot! I think I'll make some too!
And pass them out to the deserving!
:)

minimum wage should not increase inflation. Unemployment is the main thing that is affected by changes in the minimum wage. The extent that it is affected depends on various aspects of the economy.

Although, following the mainstream of public debate on the topic of unemployment, one would get the impression outsourcing is completely irrelevant to unemployment.

wages, then the ability for firms to outsource to other countries increases the job loss associated with an increase in the minimum wage.

Outsourcing may or may not increase total unemployment in general. There are a number of other policy decisions and situational considerations that affect how well a nation does given global competition. Overall it seems that the benefits are not quite as prevalent in America as they are in other nations. Canada, for example, has benefited significantly from a free trade environment.

as long as nothing is done about offshoring.

Canada is probably one of very few exceptions. Most of those nations that are supposed to be helped by free trade - that is, developing nations - are being robbed blind by big corporations and organizations such as WTO, IMF, World Bank.

How DARE those people in India ask for higher wages! They're supposed to be the CHEAP alternative to American workers.

My source: http://www.businessweek.com/magazine/content/06_25/b3989058.htm

....
And the outsourcing sector is now plagued by concerns about rising wages. Entry-level pay at tech and outsourcing companies climbed by as much as 13% annually from 2000 to 2004, while salaries for midlevel managers jumped 30% a year during the same period, to a median of $31,131, according to McKinsey and Nasscom, India's software industry association.
....

Once again, corporate ubergreed is at the forefront. Let's lay off all of our American workers. The workers in India can do the job for less. Oh wait, the Indians want to make more money, too. We'll show them! We're going to outsource to a yet poorer country with people willing to work for less!

that have people capable meeting their demands.

is that the workers have an idea of how much they're worth and are looking to get it.

I'm beginning to wonder if a global minimum wage for multinational corporations will put a stop to this race to the bottom. One of the comments after the article was someone mentioning that like water, the pay will find its level and it's not as low as these corporations would like it to be.

would affect as it would send development away from the nations. Development as we have seen by the post before mine, if significant enough, tends to raise human capital and increase wages. What a minimum wage would effectively do is reduce the ability for underdeveloped countries to increase the skills of their workers. Further, could you imagine the greater world agreeing on a minimum wage? Notice that it is different in most countries. It is even different in the states or provinces of many countries.

Which benefits the corporations, at the detriment of the people. Business as usual.

different then the lowest cost of labor as productivity plays a role here. They also need a business environment that has "reasonable" property rights.

If countries implement good systems they can significantly raise the wages of their people. If countries let their education level fall, spend significant resources on conducting wars and run a huge deficit naturally the wages are going to go down. To the extent that our representatives choose corporations are a tool. There are various reasons why individuals are not able to effectively accomplish the same tasks as corporations making their existence inevitable and beneficial. The extent that they are beneficial depends on the choices we as a society make regarding there actions. Things such as emission trading programs done by the EPA have done wonderful things aligning the goals of the firm with the goals of society. We need similar things as this in other aspects of the economy.

labor cost is a significant factor. Roughly a century of advancement in modern technology has left little other costs to reduce besides labor cost. That's why corporations put most of their efforts trying to reduce production cost in reducing labor cost (ie pour millions in lobbying for support of offshoring and "free trade agreements" to their liking).

Since big corporations no longer operate on a national but rather on a transnational level, opposition to their greed based agenda also needs to transcend "countries".

significantly over the last century. If that was not the case we would not have the standard of living we have today.

Corporations put effort into reducing any cost they can. However we know that not all corporations are pro-free trade. Because of various trade restrictions, American farmers (including many corporations)do much better then they would in a trade liberal environment. The beef industry especially profited off of the border being closed to Canadian beef. There are a number of other corporations who would be better off in the absence of free trade because they benefit from trade barriers even though their cost of labor is cheaper.

by mechanization and automation (need less workers to do the same work)
and by lowering wages (costs less money to pay for the same labor).

Both drive the cost of production down, but also drive down the amount of wealth in the worker class. It used to be that one income per family was enough to provide quite a decent living, but that's not the case any longer.

Minimum wage is at a 50 year low while top incomes have increased up to 500% during the past decades. Small surprise that by now 50% of the wealth in the US is in the hands of 1% of the population.

The standard of living has changed alright - the US scores as low as several developing nations on indicators of wellbeing such as decease, child mortality rate, crime and suicide.
In the mean time it's the CEOs who clearly are better off, and they did not do so by lowering their own wages nor by reducing the own numbers.

I suppose you are aware that we you and those who are pro 'free-trade' call "trade barriers", is called "worker's rights", "living wage" and "environmental protection" by others.

included in a free trade environment. In fact I would expect that nations significantly reduce the cost of compliance for increasing environmental standards. Conservatives and others who argue the reverse are just trying to scare people into believing what they do. This can be shown based on similar principles to the fact that drilling ANWR will have an insignificant effect on the price of oil. Trade has given us an option that we would not otherwise have.

The living wage concept becomes much more difficult as classic methods for equality are not as certain. The effective mechanisms take liberal values and a very specific view of wealth that most with liberal values lack. When people think wage disparity, they don't think education disparity. They don't look at how institutions transfer wealth. This is where the problem lies whether the environment is free trade or not.

Because it increases cost and thus reduces profits for corporations - same corporations that push for this kind of 'free trade'.

Believe it or not the total abatement cost have been about the same (as a percentage of GDP) while the standards, on average, have improved significantly. In general the harm to the economy caused by pollution standards is less then those who propose the reduction in standards make it out to be.

I find that last part of your post particularly amusing. This type of "guilt by association” is not logically sound. It is, however, used by just about every political party to advance their agenda.

It's called "lobbying", "corruption" and "ownership of the MSM".

I thinks it's debatable whether or not the standards have improved over the past couple of decades. Looking at the numbers, it's rather the opposite:


Wealth Distribution Statistics
http://www.cooperativeindividualism.org/wealth_distribution1999.html

The United Nations Development Program reports

While global GNP grew 40 percent between 1970 and 1985 (suggesting widening prosperity), the number of poor grew by 17 percent.

Although 200 million people saw their incomes fall between 1965 and 1980, more than 1 billion people experienced a drop from 1980 to 1993.

robbing the people then the WTO, IMF and World Bank do. Based on what I have read on other market based approach, most recently in market base regulatory systems, the government doesn't maintain good property rights. They either transfer a significant proportion to themselves or are not stable enough to enforce contracts. Further people are not sufficiently educated to adequately monitor the government. There have been two big winners out of globalization; China and India. They have been so successful because their people are ambitious and because their governments have behaved in a way such that the people could benefit from it.

Regardless globalization will not be going away. America would suffer greatly if it chooses an isolationist stance and there is no way to maintain control of major markets in the long run with partial protections.

as they are supposed to. They represent corporate interests more than the people's interests. That's not because the role of corporations is only passive. Corporations know what their own interests are and how to achieve their goal of ever increasing profits.

Thus big corporations are the main driving factor. They do play a major role in negotiations on the actual rules of the agreements. The enforcing organizations like the WTO, IMF, are created by those same corporate interests. It is the IMF that loans the money and determines the interests to be payed on those loans, as well as many of the rules to which the lending nations have to comply.

In China and India as almost anywhere, it is the rich and powerful who benefit greatly from "free trade"/globalization, besides the transnational/US corporations who reap most of the profits there - in no small part thanks to extremely low wages and slavery-like labor conditions. It's not to the benefit of the people, no matter how ambitious they are.

The scam of corporate globalization can be halted once enough people realize it is not to their benefit. Then a different form of globalization can be implemented, one based on fair trade and the common interests of labor everywhere.

--

Trading Freedom: the secret life of the FTAA (Indymedia)
Indigenous struggles, working-class resistance, women vs. the FTAA, Your Biotech Future, media activism, the NAFTA Chapter 11 investor-state dispute settlement mechanism, and the ever-popular "state repression of dissent" (coming soon to to a town near you). Footage from Akwesasne, Chiapas, Quebec City, Sao Paulo, and Tijuana, plus the combined efforts of over 100 videographers, photographers, free radio outlaws, writers, editors, techs, and rabble-rousers make this the perfect vid for your local anti-FTAA event. With implementation of the accord only a few years away, time is running out.
http://frazer.rice.edu/~tish/index.html
http://frazer.rice.edu/~tish/video.html
http://frazer.rice.edu/~tish/video.mov
http://www.chomskytorrents.org/TorrentDetails.php?TorrentID=764
http://www.indymedia.org.uk/en/2004/01/284511.html


Life and Debt
http://www.chomskytorrents.org/TorrentDetails.php?TorrentID=125
Jamaica, land of sea, sand and sun... and a prime example of the complexities of economic globalization on the world's developing countries. With twenty-five years of "help" from the International Monetary Fund (IMF) and the World Bank intended to bring Third World nations such as Jamaica into the fold of free market economies, these restructuring" policies have crippled Jamaica's efforts towards self-reliant development while enriching the lenders. This scathing film is an unapologetic look at the "new world order" from the point of view of Jamaican workers and farmers, as well as government and policy officials.

Peer pressure and boycotts may do what our "representatives" will not do.

When you can make the same amount on welfare? Aren't the "How DARE Those Poor People Make Enough to Live On" crowd yammering about how increasing the minimum wage and decreasing obscene executive bonuses takes away an incentive to work hard?

No. I'd say that working three jobs to just barely have enough to pay the bills and have zero left over for emergencies saps the will to do more than the minimum.

The UberGreedy don't want you to be able to have a living wage. They don't want you to work one job and have enough to pay the bills. Their motto is:

If there's a lot, take a lot; if there's a little, take it all.

Guaranteeing that all workers, by means of a higher minimum wage, are closer to being able to get by takes money directly out of their own wallets, to listen to them yammer on.

People who can afford to pay their bills on time don't need social services. Wouldn't the conservatives approve of that? No. See above. Mine mine mine!

People who can afford to pay their bills on time are less likely to commit crimes of desperation. Wouldn't the conservatives approve of that? No. See above. Mine mine mine mine!!

People who can afford to pay their bills on time are spending money on other people's businesses. Wouldn't the conservatives approve of that? It helps business? Right? But no. See above. MINE MINE MINE MINE MIIIIIINE!!!!

Because these UberGreedy shortsighted selfish fools don't reinvest in their company. Their company is a cow that they're milking. All the profit goes straight into thier pockets and not into the company. No womder so many companies are in trouble. It's not the people at the bottom struggling to earn enough to pay their bills on time. It's the UberGreedy people at the top gutting their company for personal gain.

They have no conscience.

is increased. 'splain how a company that needs 100 workers today will be able to operate on 25 tomorrow. The whole thing boils down to a living wage for workers means smaller stock dividends for the wealthy. They're greedy bastards.

There's no point denying it.

Not so much from companies employing fewer people to do the same ammount of work, I suspect - I don't imagine most jobs have that much slack in them - but from those businesses - I'd guess mostly smaller ones, although I don't know for sure -that will cease to be profitable if their wage bill increases, and hence stop employing *anyone*.

I think that's probably a price worth paying - my suspicion is that there won't be many such businesses - but my opinion is largely uninformed, and I may well be wrong. However, even without detailed knowledge it's clear that there will be some such job losses, and we shouldn't try and deny that.

Increasing the minimum wage will increase consumption among low wage workers. Will this increase in consumption fuel economic growth enough to increase demand for labor and thus forestall layoffs?

My deal is that the secondary effects of a minimum wage hike are not entirely predictable. Will monetary policy suppress the inflationary effects of a minimum wage increase? Probably, but increased interest rates are probably equally undesirable. Will it lead to job losses? Maybe.

I just think it's misleading to state unequivocally that it'll lead to layoffs or that there'll be no inflation.

As you said, just because some of those effects are unclear does not mean that the primary benefits are not worth the risk.

small businesses all across the land will shut their doors!










but we can spend trillions on defense (offense?) and war.

makes zero sense to me.

I'm not an economist, but I'd be very surprised indeed if the effect of doubling the minimum wage was exactly the same as that of increasing the GDP by the same ammount it would cost to pay that much more to all the people currently earning minimum wage.

:- Some people will employ fewer people.
:- Some people will no longer be able to afford to stay in business.
:- Both legal and illegal immigration will be more attractive prospects.
:- Poor people will have more purchasing power, increasing consumption and creating more jobs.
:- Unemployment will be a less attractive option, probably encouraging more people to try harder to get work.
:- Outsourcing will become a more attractive option, removing American jobs but potentially slightly increase markets for exports.
:- Demand on state benefits may either fall or rise.

Some of these effects will be desirable, others not. But all of them make the assumption that if there are currently 50,000,000 people on the minumum wage then paying them each another 10,000 dollars a year will add another 50 billion dollars to the GDP and hence increase inflation by 0.45% seem very naive indeed, I'm afraid. Economics is far more complicated than that, and I doubt if *anyone* really understands what the knock-on effects of doing so would be.

Or maybe we should get serious about competing with cheap labor in the far east and reduce minimum wage to like, 14ct/hour, and do away with unions alltogether.
I'm sure that would increase everyone's wellbeing.

Or perhaps the problem is slightly more complicated than just a matter of minimum wage. Maybe we should globalize workers' rights just as we have been globalizing corporations' rights to make ever increasing profits.

tax cuts for the rich, claiming the increase in disposible income will help everyone, can argue against increasing the minimum wage... wouldn't an increase in a far greater number of people's income cause an even greater effect across the economy?

Of course it would, but that's not really what they're interested in, is it? Cheap labor and no taxes for the wealthy. And the little people can just pull themselves up by their bootstraps or whatever it is little people are supposed to do.

But I'm BAREFOOT!

I have heard the argument that if those who can most afford it pay their fair share, they lose the incentive to work hard and achieve.

It's a BS argument. In the same vein, workers should be able to support themselves with one job. Otherwise, where's the incentive not to stay home and collect a similar pittance of welfare? For every McJob wage earner who can't make ends meet while working full time, that's a working person using social services.

The conservative response is: Cut social services. They don't want to pay for other people's mecessities.

The liberal response: Pay people enough to live on so they don't need to use these services.

There are some people who say that some jobs are only worth slave wages. Even if the work is something a monkey could do, the work is still necessary, someone has to do it, and a person's time is of value. If a bank VP on a slow day decided to sweep the floor in the front lobby, that bank VP wouldn't get paid less for the time spent sweeping.

(By the way, I've seen this happen, used to do work at banks. I've even seen entire departments playing solitaire for an entire day - people whose job titles were VP while the guy who was the Senior VP was busily working away. I spent the entire day there installing software on one computer at a time to avoid disrupting people's work, I mean games of solitaire. These people made more than I did, should they lose a day's pay because they were just goofing off all day? I'd say no, and I'd also assume that that particular day was a slow one for the department and the boss should have delegated.)

Now for my radical pipe dream:

Mandate a minimum standard of living and tie this to the minimum wage. People should at least be able to afford X,Y, and Z at going rates.

Tax the rich at least at the same rate as the poor and middle class. In my state, the upper 1% pays a lower percentage of income than any other tax bracket. The people making about 50k get hit the hardest followed by those just barely treading water over the poverty line.

Tax unearned income in excess of the current poverty line (10k per year) heavily.

Keep the estate tax but exempt family-owned and operated small businesses and family-owned and operated farms.