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

[PaulConventionWV]

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 minimum wage can influence inflation, too. You don't have to be a Keynesian to believe this. It's just a side effect of the market we now live in, which is not a free one. If the minimum waged was raised to $22/hr, you can bet your ass that prices would go up for everything. The economy would go haywire. Now, if we're talking about $9/hr, then maybe it wouldn't affect YOU that much, but places where minimum wage is common would be hit hard, such as fast food and grocery stores. Prices would most certainly go up and more people would be out of work.

Also, an increase in demand for work doesn't necessarily curtail unemployment. No matter how much some people want work, businesses won't be willing to hire them for $9/hr. You really should try to educate yourself before making assumptions that you can't back up.

 

[Danan]

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.

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.

The problem is that you only focus on one side of the equation. Yes, more workers in one segment will cause the supply curve of labor to shift. But these people are going to spend their money. And if we assume that they spend it in the same proportion as the rest of their work segment, they won't change wage rates, because the demand curve of labor will shift proportionally.

Only if they demand/consume very different products would the wage rates across segments change.

 

[angelatc]

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.

Well, you're talking to a woman who quit a lucrative position to be a stay-home Mom so you're going to have a tough time convincing me that the days of single income families are over.

There's no doubt that the government has effed up the market, but in that prosperous era I mentioned above, lots of women I worked with quit to stay home, because wages were rising significantly enough to allow them to stay at home.

And again, measuring everything by the hours it takes to earn it, everything is cheaper now than it was then. I'm busy, so I'm not going to do your homework, but go look it up. In the 60's, a person had to work for an hour to afford a loaf of bread. Now most of us can earn one in 10 minutes.

As a share of household spending, the US has the most affordable food in world

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.

I think the only thing you get dicked out of was an education.

 

[Danan]

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.

If we assume that real wages are indeed stagnant, then the material wealth of the general laborer is the same today as it was in the 80s. Given how much technology advanced that is really tragic. But nevertheless, given that this is true, purchasing power for one hour of labor is roughly the same.

If someone wants to tackle these statistics I'm not opposed to that. But I believe it's useful to make clear what we are talking about. We can't complain about stagnating real wages and then in the next sentence state that everything's more (or less) expensive today (in real terms).

 

[BAllen]

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.

Right!
Mexicans have dramatically cut wages in the building industry. Skilled carpenters make much less now because of it. Add to that the exodus of higher paying factory jobs, whose former workers now make less in the retail market (if at all), and draw a check from the government. Have housing and food prices dropped to adjust? Nope! Taxes, regulations, and zoning keep them high. Some things are cheaper, such as electronics, but not the largest expenses of housing, and healthcare, gasoline, car expense, etc.
The market has made adjustments for everyday items you'll find in dollar stores, and thrift shops, despite our monetary system. I found a 100 ct. box of tea bags for $1. 6 roll bathroom tissue for $1. 3 pack paper towels for $1.50. What happens if people quit paying for name brands? They would have to drop their prices to compete. The market will adjust, if it's allowed to. As more people shop thrift stores, mfrs. will have to drop their prices of new products to compete. So, all that money they thought they were saving by moving overseas won't be there. The monetary system isn't the problem.

 

[angelatc]

The problem is that you only focus on one side of the equation. Yes, more workers in one segment will cause the supply curve of labor to shift. But these people are going to spend their money. And if we assume that they spend it in the same proportion as the rest of their work segment, they won't change wage rates, because the demand curve of labor will shift proportionally.

Only if they demand/consume very different products would the wage rates across segments change.

I have no idea what you're talking about, but what I'm saying couldn't be any simpler. A higher supply of laborers means lower wages.

 

[angelatc]

If we assume that real wages are indeed stagnant, then the material wealth of the general laborer is the same today as it was in the 80s. Given how much technology advanced that is really tragic. But nevertheless, given that this is true, purchasing power for one hour of labor is roughly the same.

If someone wants to tackle these statistics I'm not opposed to that. But I believe it's useful to make clear what we are talking about. We can't complain about stagnating real wages and then in the next sentence state that everything's more (or less) expensive today (in real terms).

To clarify, I'm saying that

The average hourly wage in real dollars has remained largely unchanged from at least 1964—when the Bureau of Labor Statistics (BLS) started reporting it.

- that this "stagnating wage" hysteria is just noise from the left.

 

[JorgeStevenson]

I think when people talk about wages over time they tend to only talk about dollar amounts, rather than what those dollars actually buy. Think of all the things that literally cost NOTHING in 2013 -

- Pandora, grooveshark, etc. (free on-demand streaming of virtually any song you could want)
- Free encyclopedias (wikipedia)
- Free classes (youtube, MIT & Harvard, Khan Academy)
- Free games (iPad, facebook, World of Warcraft)
- Free books (amazon)
- Free TV shows (youtube, network websites)

The average person making minimum wage in 2013 is so much better off than the dude making minimum wage in 1968. Sure the guy in 1968 was paying half for gas, food, and electricity. But did he have a cellphone that could make free calls via wi-fi to anyone in the world (Skype)? Could he carry his entire music collection in his pocket, all of which he "acquired" for free? Could he get the latest news from around the world, including news on niche topics, all on his cell phone or ipod for free over wifi?

When you just throw up the numbers, sure, it looks like a real sob story. But it's a tough sell, to me, to say that the average worker is worse off now than they were long ago.

 

[TheGrinch]

I have no idea what you're talking about, but what I'm saying couldn't be any simpler. A higher supply of laborers means lower wages.

Yep, what so many people neglect is why its such a small percentage of jobs are minimum wage. Competition will dictate at what wage that can attract an employee that's worth what they're paying. Sad for us that this shit economy means they can find a good employee less (according to inflation), but that's how a market works. Labor is a market, where what you're willing to work for matters just as much as what they're willing to pay.

 

[Danan]

I have no idea what you're talking about, but what I'm saying couldn't be any simpler. A higher supply of laborers means lower wages.

No it doesn't. A higher supply of labor shifts the labor supply curve to the right. More people engaging in productive activity also means more demand for goods and services. This causes the demand curve for labor to shift to the right, too. For the same amount, on an aggregate level. The result is a greater amount of labor hours for the same wage rate.

If those people were slaves who are not allowed to consume than what you say might be true. If they are subject to the same free market forces like everybody else, they would soon be employed at a wage roughly matching their marginal productivity. Since we said they are in the same labor segment like other people (namely low skilled), they will work for the same wage rate, at least after a short period of time.

Or else all of economics is wrong.

 

[angelatc]

If we assume that real wages are indeed stagnant, then the material wealth of the general laborer is the same today as it was in the 80s. Given how much technology advanced that is really tragic. But nevertheless, given that this is true, purchasing power for one hour of labor is roughly the same.

If someone wants to tackle these statistics I'm not opposed to that. But I believe it's useful to make clear what we are talking about. We can't complain about stagnating real wages and then in the next sentence state that everything's more (or less) expensive today (in real terms).

Not only did we earn more than enough real income to pay for the real goods and services we bought in most years since 1929 (in spite of the dollar's depreciation), we also earned about 5 times more real income (and bought 5 times more real stuff) in 2007 than in 1929. Our standard of living didn't get worse, it got a lot better!

http://www.optimist123.com/optimist/2008/12/purchasing-power-propaganda.html

Note that the mid-90's era I referred to is reflected in this chart, too. If the government hadn't allowed millions and millions of low skilled workers to enter the country, this chart would look much different.

In the meantime, I think it looks like the social security bubble is the most likely culprit.

 

[kcchiefs6465]

Well, you're talking to a woman who quit a lucrative position to be a stay-home Mom so you're going to have a tough time convincing me that the days of single income families are over.

That is good to hear. The thing is that the majority of Americans cannot. I didn't want as a child. But there wasn't any extras and every week was a new week. The money never did go far enough. [this was a single worker household]

There's no doubt that the government has effed up the market, but in that prosperous era I mentioned above, lots of women I worked with quit to stay home, because wages were rising significantly enough to allow them to stay at home.

And again, measuring everything by the hours it takes to earn it, everything is cheaper now than it was then. I'm busy, so I'm not going to do your homework, but go look it up. In the 60's, a person had to work for an hour to afford a loaf of bread. Now most of us can earn one in 10 minutes.

The problem with measuring things by the hours it takes to earn it is that the processes have advanced. It is cheaper to buy with machinery, GMOs, hormones etc. [the governement subsidies are another subject] What did gas cost? What did a home cost? What did a car cost? Inflation is rampant. I really don't know if I buy into the 20 dollars then buys the same as now. My 20 dollars last year didn't buy the same as now.

I think the only thing you get dicked out of was an education.

I'm not sure if that is intentionally an insult [I blame my education ] but I am actually one of the more educated I've come across. I seek to learn everything and learn dozens of new things daily. As a '90s baby I will tell you that by the time I am of any considerable age I will be 100 times more well versed than I am now.

In case it wasn't some snide, short-handed, bitchy remark, yeah, public education sux.

 

[TheGrinch]

We also have a consumption based economy, so its not really in their interests either to pay slave wages (and even then, someone would be willibg to pay more for better workers, and competition will inevitably work its magic)

 

[BAllen]

We also have a consumption based economy, so its not really in their interests either to pay slave wages (and even then, someone would be willibg to pay more for better workers, and competition will inevitably work its magic)

They don't think that far ahead, and they rig prices with regulations. They're short sighted. Doesn't take a genius to figure out that if you export jobs and import labor, there will be less revenue for the government, and less people buying houses at the rigged rates. But they were too short sighted to see that, or didn't care. When incomes dropped, they forced bad loans, which resulted in foreclosures, then bailouts.

 

[Danan]

To clarify, I'm saying that - that this "stagnating wage" hysteria is just noise from the left.

I agree with you to some extend. But there is some truth in that wages should have risen, as productivity has risen. Not because I say so, but because wages would have risen, had the government not been meddling in the economy. Or at least it would have been easier for people to become capital owners, whose income increased dramatically.

But the left usually uses it to point out how "morally wrong" the free market is, were only capitalists get richer on the "costs" of the worker. They are actually implying the labor theory of value when arguing that way, whether they know that or not. And that's just completely wrong, I agree with you.

People aren't morally entitled to earn more as productivity increases just because Karl Marx said so. Paying your employee a market wage is not exploitation.

They would, however, more than likely be much wealthier without the government intervening in the economy and that's worth pointing out.

 

[otherone]

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.

It was NAFTA followed by our trade agreements with Asia that effed us over. Instead of "opening foreign markets" it gutted our manufacturing base. Decent skilled workers were forced to work at lower wages because industry packed up and moved abroad. Suddenly McDonalds and WalMarx no longer had to offer anything above minimum wage to find employees. The minimum wage became government-mandated price fixing.

 

[TheGrinch]

They don't think that far ahead, and they rig prices with regulations. They're short sighted. Doesn't take a genius to figure out that if you export jobs and import labor, there will be less revenue for the government, and less people buying houses at the rigged rates. But they were too short sighted to see that, or didn't care. When incomes dropped, they forced bad loans, which resulted in foreclosures, then bailouts.

Yes, regulations like minimum wage that actually help maintain the status quo (it hurts small businesses disproportionately because they need to be able to get what they're paying their employees. They can easily be priced out because they can't be as efficient or able to rely on technology instead like the volume dealers. You're only placing them at a bigger disadvantage to not be able to pay less if the work is only worth less pay)

Anyways, I thought this was a conversation about ending shortsighted regulations in favor of a free market, not discussing the way some game the system through regulations like this.

 

[angelatc]

I agree with you to some extend. But there is some truth in that wages should have risen, as productivity has risen.

They have in most of the skilled labor sectors. It's just the entry level workers who aren't making $22 an hour that are complaining. But as the work force grows, the unskilled, low paid base grows the most. In America, it's just a phase that people go through. You don't make a career out of minimum wage jobs - you move up the ladder, and one of the recently graduated high school kids takes your place.

 

[angelatc]

It was NAFTA followed by our trade agreements with Asia that effed us over. Instead of "opening foreign markets" it gutted our manufacturing base. Decent skilled workers were forced to work at lower wages because industry packed up and moved abroad. Suddenly McDonalds and WalMarx no longer had to offer anything above minimum wage to find employees. The minimum wage became government-mandated price fixing.

You spelled Walmart wrong, and they pay above minimum wage. Because being a cashier or a burger flipper isn't really a long term career choice, those were the jobs that always traditionally paid minimum wages....even when it was Mom & Pop places paying minimum wage (With no benefits, either.) They are entry level, no-skill required jobs.

 

[kcchiefs6465]

If we assume that real wages are indeed stagnant, then the material wealth of the general laborer is the same today as it was in the 80s. Given how much technology advanced that is really tragic. But nevertheless, given that this is true, purchasing power for one hour of labor is roughly the same.

If someone wants to tackle these statistics I'm not opposed to that. But I believe it's useful to make clear what we are talking about. We can't complain about stagnating real wages and then in the next sentence state that everything's more (or less) expensive today (in real terms).

The technologies and processes for making certain products have advanced. I am not sure how much a transistor cost to make in the '70s. I am sure that it is more, relatively, than it costs now, though. Add in machine labor and I could see why the relative prices remain about the same.

The value of your dollar goes down, and the processes of making what you wish to buy become cheaper, faster etc. They level off, more or less. I've noticed food being sold at the same price but with a smaller bag. Rather, the bag is the same size, but the amount of food is less. Twenty dollars today would not buy me as much as it would five years ago. And I am old enough to remember $1.25 gas.