Explaining How the Minimum Wage Hurts the Poor

[SilentBull]

Share with those who need convincing: http://www.truthinexile.com/minimum-wage-causes-unemployment/

An interesting point discussed in the article is the fact that raising the minimum wage makes lower-skilled workers compete with higher-skilled workers. A consequence that is rarely discussed.

 

[tod evans]

All one really has to do is look out the door......

The manufacturing class has been flippin' burgers for a couple of decades...

 

[PRB]

Not all poor are equal, it may help the employed people in the short run, but ask any person if it'll help the currently unemployed or unemployable people.

Liberals have a hard time admitting that raising minimum wage makes these people harder to employ, once employed, they may be better off due to higher pay, even if it may require longer or harder work, but ONLY IF they are employed, if they're not employed, it won't help them, and most likely will make them harder to employ.

 

[torchbearer]

Not all poor are equal, it may help the employed people in the short run, but ask any person if it'll help the currently unemployed or unemployable people.

Liberals have a hard time admitting that raising minimum wage makes these people harder to employ, once employed, they may be better off due to higher pay, even if it may require longer or harder work, but ONLY IF they are employed, if they're not employed, it won't help them, and most likely will make them harder to employ.

higher pay = higher taxes and higher cost of goods and services.
a net loss for the worker, though nominal values may look larger at first.

 

[PRB]

higher pay = higher taxes and higher cost of goods and services.
a net loss for the worker, though nominal values may look larger at first.

then I ask them, if they think cost of living will stay the same for them if people sharing rooms or living with parents can now afford to move out.

 

[2young2vote]

It is true, those who have earned their way up the ladder are hurt because their labor is then worth that much LESS due to the new minimum wage. If we currently have an employee who has gone from minimum wage to $11 per hour over the course of a few years, and the new minimum wage becomes $10.50 per hour, then the person who was earning $11 is now worth alot less than they originally were when compared to the rest of the pay structure of a company. The problem is employers aren't going to simply raise the wages of an employee simply because minimum wage has gone up for other people. That person who may have spent several years trying to get to $11 from $7.25 is going to have to repeat the cycle again, but this time with even more pressure from management because now they are going to be expected to provide MORE than $11 per hour in labor value.

Edit:

And regarding unemployment - it isn't about whether jobs will be lost, but how many will be GAINED. The answer for nearly every business that pays minimum wage, or near minimum wage, is NONE. My dads ice cream shop is the perfect example. We pay all of our employees minimum wage when they first start (even though we can legally pay them training wages [$4.xx something per hour] for 90 days which is all we really need the employees for, we just aren't jerks), but as they become more educated and skilled about our products and business, we begin to pay them more. We have some employees making $10.00 per hour (thats a 35% increase in just a couple years), and some making $7.40. It isn't like we instantly fire people as soon as the minimum wage goes up, we simply don't give as many hours, don't hire as many in the next season, and raise prices.

You aren't going to see a spike in unemployment by raising the minimum wage, but you WOULD see a DROP in unemployment if there wasn't one.

 

[SilentBull]

but ask any person if it'll help the currently unemployed or unemployable people.

That's a good way to get people to think about this. It makes it harder for the unemployed to become employeed, and those are the ones that need help the most.

 

[SilentBull]

You aren't going to see a spike in unemployment by raising the minimum wage, but you WOULD see a DROP in unemployment if there wasn't one.

That's the point I was making in the article. It's about future jobs that won't be made available. Unfortunately they are harder to use as examples. The left can always point to John Smith and say, "see, he's now making more." It's much more difficult to make people think about those that would have jobs if it weren't for the minimum wage.

 

[Zippyjuan]

higher pay = higher taxes and higher cost of goods and services.
a net loss for the worker, though nominal values may look larger at first.

We should try to get rid of high paying jobs. Send them to China and India.

On the other hand, if people are paid more, they have more money to spend on goods and services creating demand for other jobs.

Are minimum wage jobs significant enough that changing the minimum wage would have much impact on overall jobs or the economy? According to the BLS- 59% of all workers in 2012 were paid hourly (the rest are salaried in some form). http://www.bls.gov/cps/minwage2012.htm Of that, 4.7% (3.6 million) were paid the Federal Minimum Wage or less. That converts to 2.7% of all workers covered by minimum wage rules.

 

[2young2vote]

We should try to get rid of high paying jobs. Send them to China and India.

On the other hand, if people are paid more, they have more money to spend on goods and services creating demand for other jobs.

Are minimum wage jobs significant enough that changing the minimum wage would have much impact on overall jobs or the economy? According to the BLS- 59% of all workers in 2012 were paid hourly (the rest are salaried in some form). http://www.bls.gov/cps/minwage2012.htm Of that, 4.7% (3.6 million) were paid the Federal Minimum Wage or less. That converts to 2.7% of all workers covered by minimum wage rules.

The next question is how many people make between the current minimum wage and the new minimum wage? I'm completely guessing, but that 4.7% could easily go up to 10%. Then you need to take into account the people who were already paid above what the new minimum wage is going to be, and realize that they will then demand a higher pay due to the standard minimum being increased (A good employee might be worth 2 minimum wage employees so, over time, their wages should increase proportionately with minimum wage, but it won't happen over night).

I believe it affects a lot more people than just 3.6 million.

 

[PRB]

That's a good way to get people to think about this. It makes it harder for the unemployed to become employeed, and those are the ones that need help the most.

people who say "if we just paid each person more, we'd all have more money to donate to charity and solve other problems" are just as naive as those who think "if we just stopped taxing, we'd have more money to do all the things we wanted, including charity and then some"

 

[torchbearer]

We should try to get rid of high paying jobs. Send them to China and India.

On the other hand, if people are paid more, they have more money to spend on goods and services creating demand for other jobs.

Are minimum wage jobs significant enough that changing the minimum wage would have much impact on overall jobs or the economy? According to the BLS- 59% of all workers in 2012 were paid hourly (the rest are salaried in some form). http://www.bls.gov/cps/minwage2012.htm Of that, 4.7% (3.6 million) were paid the Federal Minimum Wage or less. That converts to 2.7% of all workers covered by minimum wage rules.

I was making $15 an hour before the minimum wage was raised... they raise it to $15, i'm still making $15.
The value of my labor is stolen, or in essence, i have to take a pay cut in wealth terms.

 

[tod evans]

I was making $15 an hour before the minimum wage was raised... they raise it to $15, i'm still making $15.
The value of my labor is stolen, or in essence, i have to take a pay cut in wealth terms.

But think of the poor unappreciated folks whose lives would be so greatly improved...

 

[tod evans]

From Drudge this morning, more folks who'll be glad for minimum wage work;

1,600 APPLICANTS FLOOD MD ICE CREAM FACTORY FOR 36 JOBS

http://www.breitbart.com/Big-Government/2014/01/06/Shenandoah-Farms-1600-applicants

Thanks to persistent unemployment and low availability of low-skill jobs, Shenandoah Family Farms’ ice cream plant in Hagerstown, Maryland has received over 1,600 applicants for a grand total of 36 jobs. Many of those applicants are former workers at the Good Humor plant that was bought by Shenandoah Family Farms. “You’d think that after 20-some-years working someplace at least somebody would think you area a good person, that you’d show up on time every day, and that would be worth something,” Luther Brooks, a 50-year-old former worker at the plant told the Washington Post. “I can’t get nothing. I’ve tried.”
Nonetheless, both Republicans and Democrats in Washington continue to maintain that America requires more unskilled, cheap labor via immigration, despite the loss of 6 million factory jobs between 2000 and 2009. That has been the pitch from immigration reform advocates, who insist that the cure-all for the American economy is an endless supply of less educated migrants to fill “do the jobs Americans won’t.”
Meanwhile, Maryland Governor Martin O’Malley (D) is pushing a $4.5 million effort to retrain workers in other industries, including “green jobs.” While 85 former workers at the plant have taken advantage of the program, just 49 have been able to secure permanent employment.

 

[TheGrinch]

We should try to get rid of high paying jobs. Send them to China and India.

On the other hand, if people are paid more, they have more money to spend on goods and services creating demand for other jobs.

Are minimum wage jobs significant enough that changing the minimum wage would have much impact on overall jobs or the economy? According to the BLS- 59% of all workers in 2012 were paid hourly (the rest are salaried in some form). http://www.bls.gov/cps/minwage2012.htm Of that, 4.7% (3.6 million) were paid the Federal Minimum Wage or less. That converts to 2.7% of all workers covered by minimum wage rules.

The proposed effect of raising minimum wage has never been to bolster the economy, so that's irrelevant to the discussion. Yes, the economy will adjust to rising wages, but the question is if this hurts or helps the people it is said to help (i.e., the underskilled making minimum wage).

First, more data from the BLS: less than 3% of all workers only make minimum wage, and 1/2 are 24 or younger. 77% of those who make $7.25/hr belong to households above the poverty line. Does that really sound like it's worth all of the negative effects to give more money to people who in large part need job experience/skills more than they need immediate cash flow?

There are 3 things that will happen when minimum wage is raised beyond what those employees are worth (in many cases all 3):

1. Less skilled workers price themselves out of employment, as most employers must rely on fewer or better employees to do more. By offering higher wages, the more skilled/experienced who previously would not work for that low wage will now be willing to do so at a higher wage. And of course most businesses cannot afford to be charities. Training, turnover, inefficiency, or more simply an employee being paid more than they can profit the company simply won't happen. They have far too much invested, risk, and in many cases small profit margins to opt for less skilled employees. You only help the more skilled, while ensuring the under-skilled will not be given a costly chance.

2. Prices go up, so the minimum wage workers may not be much better off, while those priced out of employment are worse off.

3. Big business gains a competitive edge, as they have more resources, volume and technology to overpay some employees to push buttons, whereas many of your small businesses simply can't turn a profit when they're having to pay labor more than that labor makes for them.

Also, I have to ask, if these business owners are said to be so greedy and exploiting workers, then why are only 3% of jobs minimum wage? There is a simple economic answer to that. Again, businesses compete for labor too.

The best thing you can do for the poor is to give them a chance to gain skills and experience so they can move beyond that 3% of crappy jobs, even if that means they have to take crappy wages temporarily. I lived with my granny as I took an unpaid internship, then gained skills and wages high enough to move out, and I'm not ashamed. It's certainly better than remaining unemployed and not gaining any employable skills.

Why do we only offer the privileged who've been to college to have internships and gain skills, while not allowing the underskilled the same opportunity to prove their worth before making a decent wage?

Hell, there's plenty of white guilt to where they'd love to stroke their ego by giving employment to minorities/poor who really need it, but businesses aren't charities. They aren't going to do so to the detriment of turning a profit. Most businesses just can't afford to do so.

Finally, I can't stand when people claim that workers are being exploited, when they have freedom of choice too. If a worker is willing to work for a particular wage, then obviously it is worth it to them over the alternatives. Why do you hate the poor to not give them a choice what they're willing to work for? Why would you prefer they be unemployed?

Now as for how we can raise wages, that is a more complicated issue (natural factors such as competition contribute to employees being willing to work for less), but if the stated reason why we need minimum wage is to "keep up with inflation", then are wages the problem or is inflation? If people had more of their own money and savings to invest and spend, and we had a free economy, then yes, you are correct "people are paid more, they have more money to spend on goods and services creating demand for other jobs".