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

[Danan]

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.

Normally that wouldn't be a huge problem. For every product people in the US import there has to be an export of equal price eventually. The reason why it's not quite that way with the US is that many countries around the world seem to believe that the US $ is not only a means to aquire goods essentially, but a product in and of itself that is worth having. They have little intention to trade them in for actual goods.

That being said, they are essentially just shipping you free stuff. It's a difficult claim to make that getting free stuff is that damaging. Yes, some of the jobs previously producing what is now being shipped in for free are going to go extinct. But these people can now provide the next urgent wants of others.

So there might be some transitionary damage to some people, but overall, and certainly over a longer period, that's actually a good thing. Unless other countries suddenly stop to demand dollars and want to trade in their money for actual goods when there is only a huge service industry that they can't use from abroad... but until then...

 

[anaconda]

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.

Something like a revved up dot com boom causing a massive surge in demand for IT products and everything else in the economy (including fast food) will push up the real wage, with the resultant hiring of increasingly less productive workers willing to enter the work force in response to the higher real wage. Optimistic expectations for the future might also further push the demand function into a speculative bubble. Low skilled immigrants would simply provide the additional labor needed for Burger King to meet the demands of the IT workers and others. If you are implying that price increases of goods caused retired people to return to the labor force it seems that it would be more due to the stampede for IT investment spending, as opposed to an unskilled immigrant agreeing to fill a vacancy at Burger King. Plus, a retiree's portfolio would presumably benefit in these conditions.

 

[otherone]

You spelled Walmart wrong, and they pay above minimum wage.

Misspelling aside, wasn't NAFTA mid-nineties? What effect did that have on the job market? You were around then, right?

 

[angelatc]

Normally that wouldn't be a huge problem. For every product people in the US import there has to be an export of equal price eventually. The reason why it's not quite that way with the US is that many countries around the world seem to believe that the US $ is not only a means to aquire goods essentially, but a product in and of itself that is worth having. They have little intention to trade them in for actual goods.

That being said, they are essentially just shipping you free stuff. It's a difficult claim to make that getting free stuff is that damaging. Yes, some of the jobs previously producing what is now being shipped in for free are going to go extinct. But these people can now provide the next urgent wants of others.

So there might be some transitionary damage to some people, but overall, and certainly over a longer period, that's actually a good thing. Unless other countries suddenly stop to demand dollars and want to trade in their money for actual goods when there is only a huge service industry that they can't use from abroad... but until then...

It's hard to argue that cheap prices are bad for consumers, that's for sure.

 

[Danan]

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.

I'm not saying there was no inflation. I'm talking about prices in terms of labor hours. Real wages don't take nominal terms into account. It's what could one hour of labor buy you in point x and what in point y. The claim is that it has been stagnant. And that takes into account changes in the quality/composition/packaging of products. I don't know if that claim is true, though.

 

[TheGrinch]

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.

I turned 16 in 1998, and that summer it got down to 79¢ a gallon. I filled my little civic up for 8 bucks. Just unfathomable after recently paying $70 for only twice the gas. PProbably one of the few sectors I wouldn't mind regulation is in oil speculation, because it only exacerbates the problem. Should not publicly traded IMO, but I'd happily concede that for a truly free economy.

 

[JorgeStevenson]

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.

But the $4 gas today comes with low cost GPS on your cellphone, free google maps, social networking apps that allow you to skip high-traffic areas, the ability to bring your entire music collection with you while you drive, the ability to order your take-out while you wait at a stop light, the ability to listen to Ron Paul on-demand while you drive via youtube etc. Isn't it rather rudimentary to compare prices from two different eras, look at the lower one, and automatically say it must be better? It would cost billions of dollars to do in the $1.25 gas era what you can do today for just $4.

 

[otherone]

Normally that wouldn't be a huge problem. For every product people in the US import there has to be an export of equal price eventually.

Manufacturing has plummeted in the West (and Japan)in the last 15 years. Pardon my naivete, but you can't offset a 44 billion trade deficit with cheeseburgers.

 

[angelatc]

Something like a revved up dot com boom would cause a massive surge in demand for IT products and everything else in the economy (including fast food), and push up the real wage. This would cause the hiring of increasingly less productive workers willing to enter the work force in response to the higher real wage. Optimistic expectations for the future might also further push the demand function into a speculative bubble. Low skilled immigrants would simply provide the labor needed for Burger King to meet the demands of the IT workers and others. If you are implying that price increases of goods caused retired people to return to the labor force it seems that it would be more due to the stampede for IT investment spending, as opposed to an unskilled immigrant agreeing to fill a vacancy at Burger King. Plus, a retiree's portfolio would presumably benefit in these conditions.

No I was implying that wages rose high enough to make the return to the workforce attractive.

Prices didn't rise all that much, because the labor flooded the market quickly enough to keep labor prices down. As for meeting demand, I think I would have preferred the alternative - $10 Big Macs, with BK and Hardees just folding under the pressures.

 

[Danan]

But the $4 gas today comes with low cost GPS on your cellphone, free google maps, social networking apps that allow you to skip high-traffic areas, the ability to bring your entire music collection with you while you drive, the ability to order your take-out while you wait at a stop light, the ability to listen to Ron Paul on-demand while you drive via youtube etc. Isn't it rather rudimentary to compare prices from two different eras, look at the lower one, and automatically say it must be better? It would cost billions of dollars to do in the $1.25 gas era what you can do today for just $4.

True, comparisons between two periods in time are always inherently flawed. There is no real scientific basis for that. That being said, those statistics can still be quite insightful if you know how to interprete them.

 

[angelatc]

Misspelling aside, wasn't NAFTA mid-nineties? What effect did that have on the job market? You were around then, right?

Sure, and manufacturing capital went to where it would get the greatest return. Low wages, less environmental controls, no unions - jobs went offshore. those 10% annual raises we were getting stopped.

 

[Danan]

Manufacturing has plummeted in the West (and Japan)in the last 15 years. Pardon my naivete, but you can't offset a 44 billion trade deficit with cheeseburgers.

Why would you want to offset a trade deficit? Normally the other side would want to offset their surplus. But if they don't want to, all the better for you. As I said, unless foreigners stop sending free stuff and the US can't offset those missing goods quickly enough because resources need time to reallocate, there is no damage done by a trade deficit. If you could be 100% sure that there would always be an ever growing trade deficit, that would be the best case scenario.

 

[kcchiefs6465]

But the $4 gas today comes with low cost GPS on your cellphone, free google maps, social networking apps that allow you to skip high-traffic areas, the ability to bring your entire music collection with you while you drive, the ability to order your take-out while you wait at a stop light, the ability to listen to Ron Paul on-demand while you drive via youtube etc. Isn't it rather rudimentary to compare prices from two different eras, look at the lower one, and automatically say it must be better? It would cost billions of dollars to do in the $1.25 gas era what you can do today for just $4.

Gas prices do not have anything to do with the other, such as the GPS that Google provides, for example. [largely] Quite honestly I'd prefer a cell phone that doesn't give up information warrantlessly and doesn't track my every move. It's kind of creepy. I wish I could opt out and just pay reasonable prices at the pump. [not that I even 'can' drive- those assholes] I like my cars 'stupid.' I like my phones 'dumb.' And I really am skeptical of the advantages of being advertised to on a second by second basis. I've mentioned that I wish I did grow up before '1984' and that much is true. The generation ahead of me is going to be conditioned to that nonsense. [not that there aren't plenty of good features of it]

 

[otherone]

Why would you want to offset a trade deficit? Normally the other side would want to offset their surplus. But if they don't want to, all the better for you. As I said, unless foreigners stop sending free stuff and the US can't offset those missing goods quickly enough because resources need time to reallocate, there is no damage done by a trade deficit. If you could be 100% sure that there would always be an ever growing trade deficit, that would be the best case scenario.

So it's ok that we've become almost a completely service-based economy since 1975, and have replaced decent paying manufacturing jobs with low paying service jobs? Why does everyone complain about things like outsourcing, then? We don't want to be a producer of goods?

 

[anaconda]

No I was implying that wages rose high enough to make the return to the workforce attractive.

Prices didn't rise all that much, because the labor flooded the market quickly enough to keep labor prices down. As for meeting demand, I think I would have preferred the alternative - $10 Big Macs, with BK and Hardees just folding under the pressures.

Ah! Thanks for clarifying. I misunderstood you. Yet, I'm still not quite clear how "low skilled" workers "stole" anyone's money?

 

[Brian4Liberty]

Warren, Obama and McCain. 3 of a kind.

Matt Lauer can suck it.

 

[parocks]

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.

Yes, raising the minimum wage is inflationary. But I don't think much. The minimum wage goes up periodically, and I don't remember hearing much about those nasty negative effects of the minimum wage hikes.

The McDonalds dollar menu still exists. We're talking pennies here. The inflationary effects are very minor even in fast food and grocery.

There is nothing at all interesting, novel, particularly Ron Paulish about opposing a hike in the minimum wage. It's just says "I don't care about poor people". I'm not talking about $22/hr either. More like $8.50? 9? A $22/hr minimum wage at any foreseeable time would wreck the economy. The minimum wage was $3.35 30 years ago when gas was less than a dollar, houses and college tuition was 4 times cheaper.

Yes, raising the minimum wage is inflationary. But not compared to the increases in the money supply. Pointing out the inflationary nature of increasing the money supply is what Ron Paul does. Pointing out that wage increases cause inflation is something Mitt Romney would do. Yes, it's true, but it's going "off message". And Mitt Romney is saying "boy, I'm glad I don't have to talk about the minimum wage - the Libertarians are doing it. See, that's what the Libertarians want." Wise to back away from that message.

 

[BAllen]

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.

You misunderstand. I'm not saying I'm in favor of minimum wage. What I'm pointing out is that there are repercussions to these actions. If wages are cut, it also cuts the number of available home buyers. So, unless the free market is allowed to compensate for the lower wages, they have no one to sell the houses to at the higher rates. So, what happens to the real estate companies? They are desperate to sell their high priced homes, so they expand the pool of borrowers to include high risk people, which results in a higher percentage of defaults. Regulations take many houses off the market for sale or rent. I can't count the number of empty houses I've seen. Ask the owner why he doesn't rent it to help pay his taxes (which is nothing but government owned land. don't pay they confiscate it). The cost to meet the codes is too expensive. So, they let it sit and rot. You don't get something for nothing. Logically, with lower incomes, we would need a smaller government. Have they responded in kind? Nope! Done just the opposite, even though they've passed these bad trade deals, and huge immigration numbers. Cause and effect.

 

[Dianne]

Don't know guys... In 1984 I as a female was making $24,000. per year ... and bitching about it ... As a Human Resource Manager, for a large insurance agency (for which Prescott Bush was on the Board) I would hire male college graduates like Dean Smith's son for twice what I was making.... with no experience.

Now I make nothing, and my husband earns less then I did in 1984. So..................... I didn't go wrong ... worked for 44 years ... why am I broke?

 

[bolil]

Don't know guys... In 1984 I as a female was making $24,000. per year ... and bitching about it ... As a Human Resource Manager, for a large insurance agency (for which Prescott Bush was on the Board) I would hire male college graduates like Dean Smith's son for twice what I was making.... with no experience.

Now I make nothing, and my husband earns less then I did in 1984. So..................... I didn't go wrong ... worked for 44 years ... why am I broke?

Only you know that. I mean, it sounds like you are asking people to enrage you. I am 24, I am no Einstein but I am no idiot, why can't I find a job with more promise than flipping burgers, roofing houses, or sticking my hands in other peoples fecal matter infused drains...?