Elizabeth Warren: Why Isn't The Minimum Wage Today $22/Hour?

[parocks]

No it would not. It reduce supply of everything that people would buy, which would drive prices up, which would lessen demand, which would result in higher unemployment.

At that point wages should start to fall to correct the problem, but thanks to the idiots who think minimum wages help poor people, it can't. So prices stay high, and people stay unemployed until inflation corrects the over payments by devaluing the dollars.


Is this your first day here or what?

Unless we don't live in a pure free-market economy. And we don't live in free-market economy.

A raise in the minimum wage would be inflationary, no question. But not that much. Most people don't make minimum wage,
the price of the stuff won't go up by that much. $22/hr is of course way off base. But, we do have a minimum wage, raising the minimum wage is not more government at all. Same government, different $. I can't see the political benefit of the "poor people aren't poor enough" argument.

We're Ron Paul supporters here. Ron Paul's contribution is to point out that increases in the money supply are what causes inflation, not increases in the minimum wage.

Also, extra $ in the hands of minimum wage workers should result in an increase in demand, which should keep unemployment at bay.

 

[anaconda]

Heck throw in the under 30 crowd. How many are walking around with degrees working at Wendys. Wage stagnation is and should be one of the things talked about because it is the root problem of almost ALL of our problems. Average American household income adjusted for inflation is just slightly up since the 80s but over the same time we went from a 1 earner household to a 2 earner household.

That should be alarming to everyone here. Somebody is screwing the pooch.

The wage has stagnated because a large segment has no valuable job skills. And a PhD. in Russian Literature is not the best skill set for programming a database application for Oracle.

 

[Danan]

This is a topic that I thought Ron Paul always did a very poor job of explaining. Ron would always talk about how the money has lost it's value, but he never would mention that the very same inflation that inflates the currency also inflates peoples' wages. Ron occasionally tried to explain his argument but I think it was lost on most voters: namely that the inflationary effect of printing money is significantly more costly to the bulk of Americans as opposed to the "early recipients" of the newly created money, because it takes many months for the newly created money to fully exert its inflationary effect throughout the macroeconomy and by that time the money has long since been spent by (as Ron would say) "the people that get to use it first." Ron Paul's other concern with monetary inflation was for people on fixed incomes such as perhaps some retirees.

I don't know about that, tbh. Rational expectations theory makes quite a good argument that this, at least in this very general form, would only work once. As soon as workers expect the price level to rise at a specific rate (and are right about their expectations) they would generally negate the effect of higher prices at the end of the year by demanding higher wages today to compensate for that.

 

[angelatc]

Originally Posted by jbauer
no one has been able to explain to me why its ok for Ron Paul to run around bitching that a mercery dime still buys a gallon of gas as an example of how our monetary system if f'ed up but how its not ok for Mrs Warren to make the exact same argument only substituting sliver for minimum wage.

Because the government doesn't set the value of the silver, and it has no legitimate business setting the minimum wage.

I'm not sure how old you are, but in the mid-90's, wages started skyrocketing. Fast food places were paying almost double the minimum wage, offering health insurance, signing bonuses, paid vacations.....I was absolutely sure that the prices were going to start rising so fast that 90% of those places would go out of business.

Instead, immigrants flooded in and retired people returned to the work force. If you want to blame anybody for stealing "your" money, that's who you should be blaming. Those other low skilled bastards.

 

[anaconda]

With equal real wages a single earner houshold in the 80s would have half the material wealth like a two earner household today. If you don't believe that, than your real problem is not stagnating real wages.

I thought "equal real wages" were, by definition, "equal purchasing power." Classically speaking, a real wage needn't be expressed in money, it can be an amount of physical output.

 

[Danan]

Unless we don't live in a pure free-market economy. And we don't live in free-market economy.

A raise in the minimum wage would be inflationary, no question. But not that much. Most people don't make minimum wage,
the price of the stuff won't go up by that much. $22/hr is of course way off base. But, we do have a minimum wage, raising the minimum wage is not more government at all. Same government, different $. I can't see the political benefit of the "poor people aren't poor enough" argument.

It won't be inflationary (at least in the longer term). With constant production, only an increase in the money supply increases the price level. The only effect of an increase in the minimum wage is that those (or at least many of them) who earn the minimum wage now are going to be unemployed. The minimum wage is just a barrier of entry, not a floor that can be raised for those standing on it.

Also, extra $ in the hands of minimum wage workers should result in an increase in demand, which should keep unemployment at bay.

http://en.wikipedia.org/wiki/Keynesian_economics

 

[Danan]

I thought "equal real wages" were, by definition, "equal purchasing power." Classically speaking, a real wage needn't be expressed in money, it can be an amount of physical output.

Yeah, he was saying (or implying) that in the 80s there were single earners, while today two people are needed for the same real income. My argument is that if you have two income earners with the same real wage as one earner, you have twice the real income. Or to put it differently, if it is in fact true that there are now two income earners in contrast to only one in the 80s, it is not to stay at the same real income, but because people seemingly want twice as much stuff.

 

[anaconda]

I don't know about that, tbh. Rational expectations theory makes quite a good argument that this, at least in this very general form, would only work once. As soon as workers expect the price level to rise at a specific rate (and are right about their expectations) they would generally negate the effect of higher prices at the end of the year by demanding higher wages today to compensate for that.

Yes. I never felt fully comfortable with Dr. Paul's reasoning on this. I forget what the empirical data says about rational expectations...I think the theory would predict stronger adjustments to household spending and savings decisions than what we actually observe.

 

[angelatc]

Yes. And if we did that, the prices of everyday things wouldn't require us to make 22 dollars an hour to afford. Ron Paul made my day when he pulled out the mercury dime during the debate.

That's where you're wrong. Adjusted for inflation, almost everything costs less now than it did then. Not to mention that you guys who can't imagine life without a minimum wage probably never lived in a world without video games and color tv. Forget about computers and cell phones.

When I wanted to call my grandmother in the ame state, the family would only let me talk for a few minutes because long distance was expensive. Now I can call her and talk to her for as long as I want, because I pay $20 a month flat rate.

http://www.aei.org/article/the-myth-of-a-stagnant-middle-class/

Third and most important, the average hourly wage is held down by the great increase of women and immigrants into the workforce over the past three decades. Precisely because the U.S. economy was flexible and strong, it created millions of jobs for the influx of many often lesser-skilled workers who sought employment during these years.

Since almost all lesser-skilled workers entering the workforce in any given year are paid wages lower than the average, the measured statistic, "average hourly wage," remained stagnant over the years—even while the real wages of actual flesh-and-blood workers employed in any given year rose over time as they gained more experience and skills.

Americans are also much better able to enjoy their longer lives. According to the Bureau of Economic Analysis, spending by households on many of modern life's "basics"—food at home, automobiles, clothing and footwear, household furnishings and equipment, and housing and utilities—fell from 53% of disposable income in 1950 to 44% in 1970 to 32% today.

Today, air travel for many Americans is as routine as bus travel was during the disco era, thanks to a 50% decline in the real price of airfares since 1980.

Today, the quantities and qualities of what ordinary Americans consume are closer to that of rich Americans than they were in decades past. Consider the electronic products that every middle-class teenager can now afford—iPhones, iPads, iPods and laptop computers. They aren't much inferior to the electronic gadgets now used by the top 1% of American income earners, and often they are exactly the same.

Despite assertions by progressives who complain about stagnant wages, inequality and the (always) disappearing middle class, middle-class Americans have more buying power than ever before. They live longer lives and have much greater access to the services and consumer products bought by billionaires.

So freaking cry me a river.

 

[Danan]

Because the government doesn't set the value of the silver, and it has no legitimate business setting the minimum wage.

I'm not sure how old you are, but in the mid-90's, wages started skyrocketing. Fast food places were paying almost double the minimum wage, offering health insurance, signing bonuses, paid vacations.....I was absolutely sure that the prices were going to start rising so fast that 90% of those places would go out of business.

Instead, immigrants flooded in and retired people returned to the work force. If you want to blame anybody for stealing "your" money, that's who you should be blaming. Those other low skilled bastards.

Since those incoming people also demand equal to their wages (after all, that's why they work), the number of workers shouldn't change the real wage. If anything it should go up because of more specialization.

The only way incoming labor force with a low skill set could effectively lower the real wage of the old low-skill segment, was if these incoming people would demand unproportionally much high-skilled labor. So if Mexican immigrants are really deep into computer programms, experimental physics equipment and going to the opera, that would make sense.

 

[angelatc]

Yeah, he was saying (or implying) that in the 80s there were single earners, while today two people are needed for the same real income. My argument is that if you have two income earners with the same real wage as one earner, you have twice the real income. Or to put it differently, if it is in fact true that there are now two income earners in contrast to only one in the 80s, it is not to stay at the same real income, but because people seemingly want twice as much stuff.

So you're saying twice as many people are now competing for the jobs, but then agreeing with the assertion that wage aren't rising because of a bankster plot?

 

[Danan]

Yes. I never felt fully comfortable with Dr. Paul's reasoning on this. I forget what the empirical data says about rational expectations...I don't think it's significantly influential enough to seamlessly adjust the nominal wage. But I'm getting past my pay grade here! I've been pretty much relying on Econ 1A & 1B in this thread!

I believe the effect that the artificial interest rate has on the capital and labor composition is the more important monetary cause for lower wages.

It is true that those who get the new money first benefit from it, imho. But most employers aren't first in the line of the Fed.

 

[TheGrinch]

I love when people advocate for minimum wage. It lets me know immediately that they have no clue what they're talking about....


I know a very liberal economist who even agrees that raising the minimum wage only hurts the disadvantaged (making less while gaining marketable skills is better than making none with no marketable skills).

 

[angelatc]

Since those incoming people also demand equal to their wages (after all, that's why they work), the number of workers shouldn't change the real wage. If anything it should go up because of more specialization.

It doesn't change the average wage, because wages aren't stagnant over the course of a lifetime. As the worker aquires skills and experience, his wages will indeed rise, but the younger workers under him still have to start out making less.

Workers who enter the workforce with specialized skills indeed make more money.

Third and most important, the average hourly wage is held down by the great increase of women and immigrants into the workforce over the past three decades. Precisely because the U.S. economy was flexible and strong, it created millions of jobs for the influx of many often lesser-skilled workers who sought employment during these years.

The only way incoming labor force with a low skill set could effectively lower the real wage of the old low-skill segment, was if these incoming people would demand unproportionally much high-skilled labor. So if Mexican immigrants are really deep into computer programms, experimental physics equipment and going to the opera, that would make sense.

No, because the only way that wages legitimately rise is through a the demand / scarcity function. If there is a shortage of unskilled workers, then business has to either raise wages, or increase the supply. Immigration and the women's movement kept wages from rising.

 

[PaulConventionWV]

It is my business to question what the employees of a fortune 500 company are doing. If we truley lived in a freemarket place then it wouldn't. But we don't. Those companies with their quasi government lobist organizations that ensure their meal ticket gets deducted out of my tax dollars and out of the future dollars of my children. Those same companies flocked to the government in 08 & 09 asking for my tax dollars to bail their asses out.

The profits of companies are up from the 60's....gee no friking kidding. Tell me something that hasn't skyrocketed since the 60's.....except nominal wage. Again, I'm not advocating for increasing the minimum wage and haven't through my comments. You say that the CEO had 4-5k people and now has 40-50k people. Great, good for them. Thats a great argument for them making 10x the salary then they did in the 60s not 500x.

I know I'm quite alone here and frankly don't care but no one has been able to explain to me why its ok for Ron Paul to run around bitching that a mercery dime still buys a gallon of gas as an example of how our monetary system if f'ed up but how its not ok for Mrs Warren to make the exact same argument only substituting sliver for minimum wage. Its the same problem caused by the same people that is damaging our country.

Those that can't see this hypocrisy are only kidding themselves. So take your "class warfare" and stick it because we don't live in a free market. Not even remotely close.

The difference is clear. Ron Paul is advocating sound money. Warren is advocating a higher minimum wage. Which one do you agree with? Even if that wasn't her point, I don't think she's exactly a libertarian, so forgive me if I question her dedication to sound money.

 

[misean]

Unless we don't live in a pure free-market economy. And we don't live in free-market economy.

A raise in the minimum wage would be inflationary, no question. But not that much. Most people don't make minimum wage,
the price of the stuff won't go up by that much. $22/hr is of course way off base. But, we do have a minimum wage, raising the minimum wage is not more government at all. Same government, different $. I can't see the political benefit of the "poor people aren't poor enough" argument.

We're Ron Paul supporters here. Ron Paul's contribution is to point out that increases in the money supply are what causes inflation, not increases in the minimum wage.

Also, extra $ in the hands of minimum wage workers should result in an increase in demand, which should keep unemployment at bay.

The best way to think of it is in terms of productivity. Will higher labor costs result in more or less efficient production? The answer of course is less efficient. You will have a combination of higher costs of goods for consumers and/or lower profits. Lower profits means less capital reinvestment, which perpetuates lower productivity.

Raising the minimum wage by a small amount isn't going to effect employment much because so few people are on the minimum wage. Minimum wage laws in general affect teenagers. Teenage unemployment is over 30 percent and black teenage unemployment is over 50 percent. Forcing the minimum wage up to $9 like Obama proposes is just going to price the kid in Detroit who went to a lousy school and is from a single parent home, out of the labor market. That in turn has unseen costs down the road.

And that last part about increasing demand is pure Keynes. All unemployment is voluntary in a free market, so there is no keeping unemployment at bay. Demand doesn't drive an economy. Entrepreneurs figuring out how to produce a good at a price that people are willing to pay that satisfies their needs drives the economy. Those entrepreneurs are then able to hire more people. In other words, production is the driver.

 

[angelatc]

I love when people advocate for minimum wage. It lets me know immediately that they have no clue what they're talking about....


I know a very liberal economist who even agrees that raising the minimum wage only hurts the disadvantaged (making less while gaining marketable skills is better than making none with no marketable skills).

Yep. When the economy is booming, the real minimum wage is usually much higher than the government mandate. When the bust occurs, the minimum wage is a price floor, which creates a surplus.

 

[Danan]

So you're saying twice as many people are now competing for the jobs, but then agreeing with the assertion that wage aren't rising because of a bankster plot?

I'm a little confused right now tbh. It's quite late here.

I'm not saying that twice as many people are competing for jobs. His assertion was that today twice as many people per family need to go to work. However he didn't deny that real wages are stagnating. If real wages in the 80s and today are the same and if twice as many people per family are earning this same wage, than they simply have twice the income. I'm not saying that any of those assumptions are true, but I didn't make them.

I do believe that without public monetary policy (or policy in general) people today would be better off and would have higher real wages. And also that banks lobby for policies that are not beneficial to most taxpayers. That being said, I give all blame to the politicians who are getting bribed and are actually enacting those policies.

The number of people in an economy does not affect the wage rate negatively, generally speaking.

Does that answer your questions?

 

[kcchiefs6465]

That's where you're wrong. Adjusted for inflation, almost everything costs less now than it did then. Not to mention that you guys who can't imagine life without a minimum wage probably never lived in a world without video games and color tv. Forget about computers and cell phones.

When I wanted to call my grandmother in the ame state, the family would only let me talk for a few minutes because long distance was expensive. Now I can call her and talk to her for as long as I want, because I pay $20 a month flat rate.

http://www.aei.org/article/the-myth-of-a-stagnant-middle-class/
So freaking cry me a river.

How much was gas on a relative scale? [I understand the fickle nature of gas prices with regards to what country we want to harrass or buy from] How much was necessities? A gallon of milk, for example, as compared to now? The prices went down for televisions because the parts needed to make them became more easily produced as well as the processes to make them. That doesn't mean that the dollar hasn't lost purchasing power. It isn't that I'm asking for sympathy. I'm asking for you to understand. The days of single income families are over.

Now I'm reasonable and would like to hear other explanations, but so far what I hear is that they are 'printing' billions if not trillions for foreign banks and our own ridiculous expenditures while no one gives two shits if I can eat for the week. Do not tell me how much better off I am than other generations. A lot of bullshit came about in yours if I'm not mistaken. [I'm not trying to be rude] We need to fix this for the future generation. As I'm obviously working for pennies and getting dicked out of any liberty I thought I had.

 

[alucard13mmfmj]

Sure. We can raise it to 22/hr. But then a loaf of bread would be 10 dollars and a burger would be 20 bucks.