How to raise the minimum wage without affecting the economy

[Neil Desmond]

It seem everyone wants to raise the minimum wage: http://www.thenation.com/blog/177485/americans-want-great-big-increase-minimum-wage

Even the White House wants it to be raised: http://www.nytimes.com/2013/11/08/business/10-minimum-wage-proposal-has-obamas-backing.html

I think there's a solution for doing this without having an adverse effect on the economy. Basically, raising the minimum wage ideally provides an increase, but it doesn't go far enough unless some other things are done along with it. What I mean is this; if the minimum wage is increased by say 25%, then the income for all other employees needs to be increased by 25% as well, and all thresholds, such as tax brackets, also need to be increased. There may be other details I'm missing, but the point is that there are things out there that need to be compensated for or adjusted along with a minimum wage increase in order to prevent it from tanking the economy.

In other words, think of it like keeping an equation balanced. For instance, take a random equation such as A = 25*B; if you want to have something that results in the multiplication of A by a factor of 3 (i.e., 3*A), then in order for the equation to balance out, the right side of 3*A = ? has to be 3*25*B, which is 75*B.

Basically, the interpretation I'm getting here when people say they want the minimum wage increased, is that they want that hourly rate number in dollars to be increased from what it is now, to something higher. What I'm trying to propose or suggest here is to basically do what can achieve that without causing things to happen that will result in the economy getting screwed up (even worse).

With this technique, the minimum wage can be increased by a factor of 10, 100, a million, whatever. Thoughts?

 

[angelatc]

Are you going to raise prices too?

 

[Schifference]

In 1978 my father was a foreman at Stanley Works in the continuous hinge department. He had worked there for like over 30 years. He was making a salary of only $26,000. At that time they built a new home on a piece of my grandfathers property and sold their first and only home a very large home in Connecticut. The house was sold for $50,000. Property taxes were cheap based on 50k. In 1982 I worked the night shift running a printing press and made $17.82 hour. From 1992-2004 I owned a printing company and could hire people to run large printing presses capable of printing 4 colors all at once on a sheet of paper that was 28" x 40". I could hire people at that time for and still today for $18. Wages have remained stagnant but costs have increased dramatically. Today you cannot build a house inexpensively due to the cost of materials. That same $50,000 house from 1978 is now assessed for $300k at a mill rate of 29. So $8700 just in property taxes. In 1978 gas was around $.50 a gallon. Heating oil was way cheaper and so was food, clothing, and everything else. The only thing that keeps stable is our low wages. Raising the minimum wage will only accomplish one thing. It will put more money in the governments pocket to abuse because your taxes won't go down but all those people that were making $7 won't qualify for all the government entitlements that they use to get. It matters not how much the government collects they never have enough. Back in 1978 there was no CT income tax and the lottery was a new program that was going to be used for great things. Now there is CT income taxes and where does all that lottery money go? Point is raising wages is a bad idea. Better make $4 an hour and pay way less for everything. This train is about to be a wreck.

 

[Acala]

It seem everyone wants to raise the minimum wage: http://www.thenation.com/blog/177485/americans-want-great-big-increase-minimum-wage

Even the White House wants it to be raised: http://www.nytimes.com/2013/11/08/business/10-minimum-wage-proposal-has-obamas-backing.html

I think there's a solution for doing this without having an adverse effect on the economy. Basically, raising the minimum wage ideally provides an increase, but it doesn't go far enough unless some other things are done along with it. What I mean is this; if the minimum wage is increased by say 25%, then the income for all other employees needs to be increased by 25% as well, and all thresholds, such as tax brackets, also need to be increased. There may be other details I'm missing, but the point is that there are things out there that need to be compensated for or adjusted along with a minimum wage increase in order to prevent it from tanking the economy.

In other words, think of it like keeping an equation balanced. For instance, take a random equation such as A = 25*B; if you want to have something that results in the multiplication of A by a factor of 3 (i.e., 3*A), then in order for the equation to balance out, the right side of 3*A = ? has to be 3*25*B, which is 75*B.

Basically, the interpretation I'm getting here when people say they want the minimum wage increased, is that they want that hourly rate number in dollars to be increased from what it is now, to something higher. What I'm trying to propose or suggest here is to basically do what can achieve that without causing things to happen that will result in the economy getting screwed up (even worse).

With this technique, the minimum wage can be increased by a factor of 10, 100, a million, whatever. Thoughts?

Putting aside the morality of "adjusting" otherwise peaceful human relations at gun point, and assuming that you could actually increase every income stream (it couldn't just include wages, it would have to include pensions etc. to be balanced) equally or somehow proportionately, you would accomplish nothing other than probably causing a depression. If my paycheck is suddenly twice as large, it helps me not at all if everyone else's paycheck is also twice as large because prices (that pay their wages) will all have to double.

So at best you accomplish nothing. But you would inevitably create massive disruption in, for example, existing contractual relationships that were priced at the old wage rate. For example, suppose I have a five-year pre-paid gym mebership and suddenly the gym has to pay all of its workers substantially more. Or suppose I have ordered a million widgets at x dollars and suddenly the widget maker has to pay all of his worker and executives substantially more. You would sink millions of businesses. Additionally, you would instantly increase the overall demand for money dramatically without increasing the supply. The result is radical deflation.

Why do you want to artificially raise wages anyway?

 

[oyarde]

Are you going to raise prices too?

And the govt gets to steal more tax money from the children that have no deductions.

 

[Brian4Liberty]

Attempting to centrally adjust the economy is impossible, and a fool's (or crook's) errand. It can certainly be manipulated to benefit a highly connected Oligarchy, but there are far too many variables to do much else.

Supply and demand. Wages will rise when jobs outnumber workers. It's that simple, and nothing else really matters. This is why expanded immigration during a high-unemployment recession is so counter-productive.

Not only that, the power of the individual increases when jobs outnumber workers. Liberty and freedom increase along with wages.

 

[gwax23]

Of course a Bitcoiner would support price fixing....

 

[oyarde]

Attempting to centrally adjust the economy is impossible, and a fool's (or crook's) errand. It can certainly be manipulated to benefit a highly connected Oligarchy, but there are far too many variables to do much else.

Supply and demand. Wages will rise when jobs outnumber workers. It's that simple, and nothing else really matters. This is why expanded immigration during a high-unemployment recession is so counter-productive.

Not only that, the power of the individual increases when jobs outnumber workers. Liberty and freedom increase along with wages.

Yep , right now , more gubmit central planning would only mean less low paying jobs for the young , higher prices , more tax collection, more unemployed in the future as jobs added not equal to number entering the workforce .

 

[Schifference]

Attempting to centrally adjust the economy is impossible, and a fool's (or crook's) errand. It can certainly be manipulated to benefit a highly connected Oligarchy, but there are far too many variables to do much else.

Supply and demand. Wages will rise when jobs outnumber workers. It's that simple, and nothing else really matters. This is why expanded immigration during a high-unemployment recession is so counter-productive.

Not only that, the power of the individual increases when jobs outnumber workers. Liberty and freedom increase along with wages.

So wages would go up and costs would go down if one person from each household decided to be a stay at home spouse. A shortage of workers would develop. People would be paid more. Costs would go down because people had less disposable income.

 

[Brian4Liberty]

So wages would go up and costs would go down if one person from each household decided to be a stay at home spouse. A shortage of workers would develop. People would be paid more. Costs would go down because people had less disposable income.

Getting both people from each household into the workforce was a way to expand the workforce and lower wages. They love pyramid schemes. You can't "print" workers like you can money, but there are other techniques. Immigration become the next layer on the pyramid.

 

[Cutlerzzz]

Print lots of money and tell business several years in advance that you're increasing minimum wage. That's generally how it's been done in America. After a few years of inflation minimum wage isn't any higher in real terms and business has had several years to prepare for the potential impact.

That way the economy doesn't collapse and politicians can still claim they are helping the little guy.

 

[erowe1]

It seem everyone wants to raise the minimum wage: http://www.thenation.com/blog/177485/americans-want-great-big-increase-minimum-wage

Even the White House wants it to be raised: http://www.nytimes.com/2013/11/08/business/10-minimum-wage-proposal-has-obamas-backing.html

I think there's a solution for doing this without having an adverse effect on the economy. Basically, raising the minimum wage ideally provides an increase, but it doesn't go far enough unless some other things are done along with it. What I mean is this; if the minimum wage is increased by say 25%, then the income for all other employees needs to be increased by 25% as well, and all thresholds, such as tax brackets, also need to be increased. There may be other details I'm missing, but the point is that there are things out there that need to be compensated for or adjusted along with a minimum wage increase in order to prevent it from tanking the economy.

In other words, think of it like keeping an equation balanced. For instance, take a random equation such as A = 25*B; if you want to have something that results in the multiplication of A by a factor of 3 (i.e., 3*A), then in order for the equation to balance out, the right side of 3*A = ? has to be 3*25*B, which is 75*B.

Basically, the interpretation I'm getting here when people say they want the minimum wage increased, is that they want that hourly rate number in dollars to be increased from what it is now, to something higher. What I'm trying to propose or suggest here is to basically do what can achieve that without causing things to happen that will result in the economy getting screwed up (even worse).

With this technique, the minimum wage can be increased by a factor of 10, 100, a million, whatever. Thoughts?

I don't understand. Are you proposing that this be done by law? As in a law that mandates an equal percentage increase in all prices of everything in the entire economy?

How would that be enforced?

And then, after that initial pre-set raise in all prices, wouldn't the government have to continue to dictate to all parties in all economic transactions precisely how much money they would have to exchange?

Isn't there a word for a system where the government tries to have total control over all prices like that?

 

[Neil Desmond]

Are you going to raise prices too?

That's up to businesses that offer goods and services to "raise" (or adjust prices accordingly) based on market demand.

 

[Neil Desmond]

Point is raising wages is a bad idea.

Increasing the minimum wage is a bad idea? I agree. But those in control of the government seem to want to raise it, regardless, so my point is if they want to raise it, let's adjust everything else so the damage gets cancelled out.

 

[Neil Desmond]

Putting aside the morality of "adjusting" otherwise peaceful human relations at gun point, and assuming that you could actually increase every income stream (it couldn't just include wages, it would have to include pensions etc. to be balanced) equally or somehow proportionately, you would accomplish nothing other than probably causing a depression. If my paycheck is suddenly twice as large, it helps me not at all if everyone else's paycheck is also twice as large because prices (that pay their wages) will all have to double.

So at best you accomplish nothing. But you would inevitably create massive disruption in, for example, existing contractual relationships that were priced at the old wage rate. For example, suppose I have a five-year pre-paid gym mebership and suddenly the gym has to pay all of its workers substantially more. Or suppose I have ordered a million widgets at x dollars and suddenly the widget maker has to pay all of his worker and executives substantially more. You would sink millions of businesses. Additionally, you would instantly increase the overall demand for money dramatically without increasing the supply. The result is radical deflation.

Why do you want to artificially raise wages anyway?

There's substantially nothing I disagree with in what you're stating here. If it were up to me, I would say don't raise the minimum wage. In fact, I think minimum wages are completely ridiculous and ought to be done away with. If the government wants to impose a minimum wage on itself (for government jobs) or on contractors that do business with them, then that's their issue.

Regarding contractual relationships, one response one might be inclined to cough up is that businesses are taking a risk by getting into contractual relationships if they don't make contracts that allow for minimum wage increases. Guess what, if they're not it's already going to happen because those in control of government want to impose their minimum wage increase on businesses anyways. My response would be that since economics are allowed to talk about things based on adjustments for inflation, why can't they also talk about things adjusted for minimum wage increases and corresponding other increases, and also let businesses make adjustments to contractual agreements based on things like minimum wage increases?

The objective is exactly that, to hopefully accomplish nothing. You're getting my point. Well, it's not exactly nothing. The people who make minimum wage will get what they want, which is to say "Ooh! I'm making more money now! Woohoo!" Get it?

 

[Neil Desmond]

Attempting to centrally adjust the economy is impossible, and a fool's (or crook's) errand. It can certainly be manipulated to benefit a highly connected Oligarchy, but there are far too many variables to do much else.

Supply and demand. Wages will rise when jobs outnumber workers. It's that simple, and nothing else really matters. This is why expanded immigration during a high-unemployment recession is so counter-productive.

Not only that, the power of the individual increases when jobs outnumber workers. Liberty and freedom increase along with wages.

I agree; trying to centrally adjust the economy is impossible. Think of using a measuring contraption that one can zero in; what I'm saying is that with the change in the minimum wage, what's needed to "normalize" things is to zero in all the other things that get offset. If done correctly, the minimum wage increase becomes nothing more than a superficial and in essence meaningless change in the number. It's like when you go from 1 meter to 1,000 millimeters; it's a written number with more zeros in it (to make minimum wage recipients happy), but the unit changed from meter to millimeters so the distance doesn't get affected.

 

[Neil Desmond]

Of course a Bitcoiner would support price fixing....

When did this become a bitcoin thread?

 

[Neil Desmond]

Print lots of money and tell business several years in advance that you're increasing minimum wage. That's generally how it's been done in America. After a few years of inflation minimum wage isn't any higher in real terms and business has had several years to prepare for the potential impact.

That way the economy doesn't collapse and politicians can still claim they are helping the little guy.

Exactly. They're making it look like they're helping the little guy, to win votes for their political party, and in reality they're accomplishing either nothing, or they're making things worse.

 

[gwax23]

Your so indecisive. You make a thread proposing a little scheme to centrally fix prices and control the economy then when people call you out on it you say you support the free market.

 

[Neil Desmond]

I don't understand. Are you proposing that this be done by law? As in a law that mandates an equal percentage increase in all prices of everything in the entire economy?

No, I'm not saying do that for prices, only for wages, or pay rates. I don't want to propose laws that mandate anything, I want laws that mandate things like minimum wage to be eliminated, but it seems like that's not going to happen. What I'm saying is that since that's not going to happen, then let's (figuratively speaking) "roll with the punches" so the net result or effect is 0, other than getting minimum wage earners to smile because the number (the coefficient that complements the unit of currency) printed on their paycheck is bigger.

How would that be enforced?

You know, the usual way; by gangs of big mean men with guns wearing matching costumes, yelling, all that nonsense.

And then, after that initial pre-set raise in all prices, wouldn't the government have to continue to dictate to all parties in all economic transactions precisely how much money they would have to exchange?

Isn't there a word for a system where the government tries to have total control over all prices like that?

Yes; in fact maybe we ought to force them to act in a way that shows what they really are. I've heard that this can be a technique that's effective at getting people to notice and understand what's really going on.

I'm just as opposed to this big government nonsense as you are, but I'm just trying to explore outside the box thinking ideas for dealing with this problem.