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Raising Minimum Wage

 
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eich82
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PostPosted: Feb 13, 2013 9:50 am    Post subject: Raising Minimum Wage Reply with quote

Obama spoke about bumping min wage to $9.00 an hour last night. How can politicians be so economically inept? Have they not figured out that raising minimum wage does nothing but make things worse?

Businesses only have so much money available to put towards payroll. A 24% increase in wages (which is actually a lot more than that when calculating additional benefits/taxes etc.) is only going to result in two scenarios. The first scenario is that the business is able to raise their prices and pass this on to the consumers. This means that the cost of everything goes up, essentially negating the whole point of raising minimum wage in the first place, which is to allow minimum wage earners to live better.

The second scenario, is that the business can't pass those prices on to consumers. In this scenario, there is still a finite amount of money available for payroll. So now, in order to compensate for a 24+% increase in payroll costs, the business must either cut labor hours across the board, or by firing employees. So in this scenario, we now have either more people without jobs, or people are working less hours.

And at the end of the day, in either scenario, the real losers in this deal are the people who make more than minimum wage. Someone making $15/hr, isn't making Min wage + 8 dollars an hour. So the bump in minimum wage won't mean that they make an extra $1.75/hr, it will just mean that they now make $1.75/hr closer to minimum wage. Of course they're also going to be seeing the effect of the increased wages (see above) of their goods. So at the end of the day, we've now decreased the discretionary income and the quality of life non minimum wage earners have, for the illusion that minimum wage earners are going to enjoy a better life. What ever happened to acquiring skills that make you more valuable to your employer to justify a higher wage than the minimum?

Politicians can't possibly be this dense can they?
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PostPosted: Feb 13, 2013 10:11 am    Post subject: Reply with quote

Welcome to the party. Out here on the left coast we have state minimums above federal(close to $9 anyway in OR), and by the way here they are indexed to inflation so it raises every year.
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PostPosted: Feb 13, 2013 10:26 am    Post subject: Reply with quote

It's $8 here.

I can understand inflation indexing it, but picking arbitrary numbers and setting them globally does not make sense.

The local market should bear whatever the min rate is. Setting a global number is counterproductive - why should someone in Minot ND have the same min wage as someone in SFO? All that is going to do is cause inflation at the local level in the markets with lower cost of living. Let the local market work itself out and stop trying to intervene at a federal level...

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eich82
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PostPosted: Feb 13, 2013 10:28 am    Post subject: Reply with quote

eeven73 wrote:
Welcome to the party. Out here on the left coast we have state minimums above federal(close to $9 anyway in OR), and by the way here they are indexed to inflation so it raises every year.


I believe Obama's plan calls for that as well (indexed to inflation).

I'm constantly astounded at the lack of basic economic and financial intelligence in this country, and from all walks of life. From politicians to burger flippers and everyone in between, it seems like 70% of people in this country don't understand the most basic financial or economic principles.
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eich82
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PostPosted: Feb 13, 2013 10:35 am    Post subject: Reply with quote

chavez wrote:
It's $8 here.

I can understand inflation indexing it, but picking arbitrary numbers and setting them globally does not make sense.

The local market should bear whatever the min rate is. Setting a global number is counterproductive - why should someone in Minot ND have the same min wage as someone in SFO? All that is going to do is cause inflation at the local level in the markets with lower cost of living. Let the local market work itself out and stop trying to intervene at a federal level...


If you look at historical levels, the current min. wage actually has slightly outpaced inflation.

As a comical anecdote, I saw an article referencing a study showing that every $1.00 increase in wages in a minimum wage household results in an annual increase in household spending of $2,800.

That sounds great! Of course, until you realize that in an average work year of 2000 hours, that $1.00 increase only means an extra $2000 in wages (pre-tax) to that household. So either the study is wrong, or the increase in wages causes these people to actually go 800 dollars in debt per year. Laughing or Rolling Eyes ... I'm not sure which.
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PostPosted: Feb 13, 2013 10:59 am    Post subject: Reply with quote

eich82 wrote:
As a comical anecdote, I saw an article referencing a study showing that every $1.00 increase in wages in a minimum wage household results in an annual increase in household spending of $2,800.

That sounds great! Of course, until you realize that in an average work year of 2000 hours, that $1.00 increase only means an extra $2000 in wages (pre-tax) to that household. So either the study is wrong, or the increase in wages causes these people to actually go 800 dollars in debt per year. Laughing or Rolling Eyes ... I'm not sure which.


That sounds about right, you are explaining Washington accounting 101 right?
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PostPosted: Feb 13, 2013 11:08 am    Post subject: Reply with quote

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I'm constantly astounded at the lack of basic economic and financial intelligence in this country, and from all walks of life. From politicians to burger flippers and everyone in between, it seems like 70% of people in this country don't understand the most basic financial or economic principles.


QFT

A large portion of the general public doesn't fully grasp the difference between REVENUE and PROFIT for a corporation. Forget trying to talk US Monetary Policy or the like.

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PostPosted: Feb 13, 2013 11:35 am    Post subject: Reply with quote

I think it has more to do with appeasing the voting base to stay in office than it does about any sort of logic and reason.
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PostPosted: Feb 13, 2013 12:16 pm    Post subject: Reply with quote

Okie Boarder wrote:
I think it has more to do with appeasing the voting base to stay in office than it does about any sort of logic and reason.


While there is some truth to that, how much of the voting base makes minimum wage? I don't know the figures, but I'm sure a small % of the population actually makes minimum wage. And a good chunk of minimum wage earners aren't even old enough to vote. Another good chunk of them probably don't bother to vote.

And again, this only gives the illusion that minimum wage earners are better off with an increased min. wage. Furthermore, for everyone else, it only hurts them, which should have the opposite impact on voting.

Of course this brings us back to my earlier comment about the lack of economic/financial intelligence in the average American, which basically means that most people are too stupid to realize that this affects them negatively and/or they're too complacent to care.
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PostPosted: Feb 13, 2013 1:03 pm    Post subject: Reply with quote

Right, but those that vote and don't understand the process (to your point), will be the ones that see this as a good thing and support it.
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PostPosted: Feb 13, 2013 1:44 pm    Post subject: Reply with quote

eich82 wrote:
chavez wrote:
It's $8 here.

I can understand inflation indexing it, but picking arbitrary numbers and setting them globally does not make sense.

The local market should bear whatever the min rate is. Setting a global number is counterproductive - why should someone in Minot ND have the same min wage as someone in SFO? All that is going to do is cause inflation at the local level in the markets with lower cost of living. Let the local market work itself out and stop trying to intervene at a federal level...


If you look at historical levels, the current min. wage actually has slightly outpaced inflation.

As a comical anecdote, I saw an article referencing a study showing that every $1.00 increase in wages in a minimum wage household results in an annual increase in household spending of $2,800.

That sounds great! Of course, until you realize that in an average work year of 2000 hours, that $1.00 increase only means an extra $2000 in wages (pre-tax) to that household. So either the study is wrong, or the increase in wages causes these people to actually go 800 dollars in debt per year. Laughing or Rolling Eyes ... I'm not sure which.


I thought most studies counted household income as 2 earners. I may be wrong on that though.
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PostPosted: Feb 13, 2013 3:34 pm    Post subject: Reply with quote

eeven73 wrote:
Quote:
I'm constantly astounded at the lack of basic economic and financial intelligence in this country, and from all walks of life. From politicians to burger flippers and everyone in between, it seems like 70% of people in this country don't understand the most basic financial or economic principles.


QFT

A large portion of the general public doesn't fully grasp the difference between REVENUE and PROFIT for a corporation. Forget trying to talk US Monetary Policy or the like.


Have you ever seen a politician pitch a plan that economic sense? From this minimum wage BS from the left to the "taxing job creators" on the right, elected officials know their voting constituents are most likely blinded by party affiliation and it doesn't help that those that are most vocal driving the discussion happen to be way out on the fringe.

Monetary policy as a whole is complex as F@#$. I have a pretty good understanding finance in general, but when I get to talking to some colleagues with PhDs in Economics the conversation quickly goes right over my head.

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PostPosted: Feb 13, 2013 7:47 pm    Post subject: Reply with quote

Thank God it wont affect my business much, I start people off at $9 at the lowest already. The only difference is now people will bitch about it because it's only minimum wage! Laughing Rolling Eyes
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At least 50% of the population is retarded so I discount what they think or feel automatically.
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PostPosted: Feb 13, 2013 7:51 pm    Post subject: Reply with quote

I'm not remotely talking about PhD level economic theory. "Taxing Job Creators" is very real. The 5% bump in the tax rate on incomes above 400K is a royal screw job to s-corp business owners. Which brings me back to the point that most of the general population has no idea what the difference between an s-corp and a c-corp most specifically in regards to taxation. A bump in the minimum wage, the above mentioned tax implication combined with the (known at this point) costs of Obamacare equals s-corporations with employment above 50 are right in the f-zone.
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PostPosted: Feb 13, 2013 8:24 pm    Post subject: Reply with quote

I own a S-corp there are ways to plan around the increase, though betting on the Huskies to cover the spread against the ducks is not one of them. Job creation is largely created by consumption...said job creators dont consume much more than the average Joe.
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PostPosted: Feb 14, 2013 7:44 am    Post subject: Reply with quote

Quote:
I own a S-corp there are ways to plan around the increase,


I would be interested in hearing these. PM if too personal, or tell me to mind my business if proprietary. Very Happy

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PostPosted: Feb 15, 2013 12:07 pm    Post subject: Reply with quote

He's a moron.... But that's already been establish.
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PostPosted: Feb 16, 2013 10:28 am    Post subject: Reply with quote

"it seems like 70% of people in this country don't understand the most basic financial or economic principles" yet these are the people that keep the economy going! Maybe its a good thing the minimum wage is raised to give them a feeling to SPEND MORE which creates jobs.
"but when I get to talking to some colleagues with PhDs in Economics the conversation quickly goes right over my head."
I'm sure Bernacke had a phd, he taught at Princeton, but he didn't have a clue what to do in the Federal reserve(sorta like McCain in 2008 saying the economy is strong) Bernacki even passed laws to ease the control on Banks.

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PostPosted: Feb 18, 2013 12:38 pm    Post subject: Reply with quote

I've seen some discussions on other forums stating $9/hr isn't enough and that we should be raising it to $15-16/hr. Well, why stop there...why not make it $30/hr. Let's make sure everyone can make a good living, why don't we.
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PostPosted: Feb 18, 2013 1:39 pm    Post subject: Reply with quote

buckthis wrote:
"it seems like 70% of people in this country don't understand the most basic financial or economic principles" yet these are the people that keep the economy going! Maybe its a good thing the minimum wage is raised to give them a feeling to SPEND MORE which creates jobs.
"but when I get to talking to some colleagues with PhDs in Economics the conversation quickly goes right over my head."
I'm sure Bernacke had a phd, he taught at Princeton, but he didn't have a clue what to do in the Federal reserve(sorta like McCain in 2008 saying the economy is strong) Bernacki even passed laws to ease the control on Banks.


Lots of fail in this post.

First it's Bernanke, not Bernacke or Bernacki. He is still the Fed Chairman, so I'm not sure why you're using past tense. Also neither the Federal Reserve nor the Chairman of the Federal Reserve can "pass laws".

In regards to the first part of your post, go through the thread again and learn why raising minimum wage does not create jobs or actually improve the standard of living for people making minimum wage.

As far as your SPEND MORE comment, if that's what will improve the economy, why don't we just bump Minimum wage to $25/hr. Then everyone will have $50k a year to SPEND!!!! Think about how much that will benefit the economy!!!!! That's the ticket! Now if we could just couple that with the government borrowing 1-2 trillion dollars to spend and we'd be all set. It doesn't matter what they spend it on, just get the money out there and spend it. By god I think we've just solved all our economic problems for the rest of time.
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PostPosted: Feb 18, 2013 1:48 pm    Post subject: Reply with quote

Okie Boarder wrote:
I've seen some discussions on other forums stating $9/hr isn't enough and that we should be raising it to $15-16/hr. Well, why stop there...why not make it $30/hr. Let's make sure everyone can make a good living, why don't we.


You mean the classic "living wage" argument that was born out of the class warfare campaign or as I like to call it the "living good wage"?

People say you can't LIVE off of $12.00/hr. Of course by live they mean be able to buy a home in a nice neighborhood, drive a new car and replace every few years, be able to go out to eat all the time, be able to take a vacation or two every year to some far away place, have a 70" HDTV (or two), have the latest smartphone with the full data and talk package, be able to buy nice clothes all the time, etc.

Those are all standard necessities that everyone should have right? You can't have all that on $12/hr and you can't expect someone to have to go without those "necessities".

Of course all this leads back to the point made that you couldn't and shouldn't try to legislate this at a federal (macroeconomic) level because the cost of living in BFE, Idaho isn't the same as New York City.

Also when are people going to realize that their employer isn't their adoptive parent. They don't "owe" you anything more than the wage you have agreed to work for and what the market will bear for the skills and expertise you can provide. If you want to make more money, better yourself and figure out how to provide more value to an employer. I can tell you that employers do value good, reliable and talented employees, while the unreliable, low skilled, entitled employees who are more concerned about doing the least amount of work possible to get a paycheck are a dime a dozen. That's why good employees who provide value to their employers move up through an organization, while those that are looking to get the most for doing the least simply bounce around from job to job their whole lives.
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PostPosted: Feb 18, 2013 7:28 pm    Post subject: Reply with quote

eich, you probably think that we would have been fine if the American people did not bale out the big banks(so much for the free market), of course you would be wrong and you back up BernANke?(how did you ever know that was the guy I was talking about?) Bernanke is a big FAIL,he believed(believes?)less regulation for the big banks was good, this is an obvious FAIL, he didn't(doesn't) have a clue how to help the economy, just like you! You think there are going to be LESS jobs if the fairly low minimum wage law is past and yet the law could pass and the economy would get stronger.
"why don't we just bump Minimum wage to $25/hr"
funny you should bring that much money up because the the Unionized auto workers who had absolutely no skills, just a GED(if that much) got as much as $50/hr AND there was very little unemployment back then. But that was at a time when the minimum wage was $10/hr(this is of course with inflation figured in)
"That's why good employees who provide value to their employers move up through an organization" MORE B.S. This should read
Thats why ass kissers who cannot build their own business
make someone else rich with their skills and hard work. When are these good talented employees going to learn that their employer owes them NOTHING! Work two weeks and get your pay nothing else.
Now the item that IS going to be a jobs killer is if the congress cannot RAISE the debt ceiling and the automatic government cuts go into effect, but you probably think this would be a GOOD thing, don't you eich?

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