In a Pig’s Eye

The president’s Twitter account recently sent out this small dribbly contribution to the oceans of illiteracy that already exist out there. What’s another half pint?

Here’s how to improve our economy and create hundreds of thousands of jobs: #RaiseTheWage. http://OFA.BO/tXMYUq  pic.twitter.com/UDTcTSaqZJ

So here’s the comeback, and I must say that it is hard to type and snort at the same time.

So why don’t we just raise the minimum wage to a hundred dollars an hour and make everybody well off? Or, while we are in this compassion groove, why don’t we make it a hundred dollars a minute and make everybody fabulously wealthy? To reply that employers don’t have that kind of money to spare is to betray a churlish spirit, and is frankly unworthy of you. Why should we allow a detail like “not having the money” stand between us and the right thing to do?

But be a man. Run the thought experiment anyway. Do this in order to throw in high relief what is actually happening every time we raise the minimum wage. If minimum wage levels “create jobs,” as the president’s infographic would have it, why in the world is he stopping at ten bucks an hour?

I will tell you what happens every time you raise the minimum wage. If you raised it to one hundred dollars a minute, virtually everyone in the world would see that you were doing it, and what a disaster you were being. But if you raise it to ten dollars an hour, you would be doing it in that passive aggressive way of yours with plenty of deniability if the consequences of your lunacy ever become too apparent.

Have I told you what happens every time you raise the minimum wage? You are raising the costs of legal labor. That is what you are doing. Whenever you raise the price of something, you are pricing somebody, in this case employers, out of the market. When you raise the minimum wage to one hundred dollars a minute, you throw absolutely everybody out of a job, pricing all employers out of the market, and everybody sees that it was you. But if you raise it to ten dollars an hour, the only people you price out of a job are black teenagers, who have no lobbyists representing them, and so the progressive stealth campaign against blacks proceeds on, unimpeded.

So somebody raised the price of legal labor. But if you are an employer who needs labor in order to function, you have three options before you. You can hire illegal labor at the true market rates, you can reduce your labor force via layoffs, or you can refuse to grow your force through refusing new hires.

Create new jobs? In a pig’s eye.

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101 thoughts on “In a Pig’s Eye

  1. You do have a biblical obligation to pay your taxes even if you think they are too high. One of the chief reasons that people hire illegals is to avoid employer taxes. Legalizing them won’t change anything. You legalize this batch, employers will just fire them and hire the next illegal, whether they are from Mexico, Dominican Republic, Bangladesh, China, wherever., just like they did after ’87. Those employers have NO INTENTION of paying their taxes. Even if there were no minimum wage, this would still be a major issue. There are other sin related things about this, but this is an easy one to point out.

  2. Robert, does not the same argument apply to taxes as has been against the ‘living wage’ above? Is 15% too high?How about 25%? 50%? 90% Why not just have our incomes taxed at 100% and the government can then dole out what they think is your due? The question to be asked is what is Caesar’s?

  3. “So why don’t we just raise the minimum wage to a hundred dollars an hour and make everybody well off? ”
    That’s a specious argument. Presumably if someone proposed that reducing the speed limit on a road by 5mph would reduce accident deaths, you’d reply “Why not reduce it by 45mph, or ban all cars?”. Or if someone suggested that cutting 100 calories a day from your diet would help combat obesity, you’d reply: “Why not reduce it by 2000 calories? Why not just eat a carrot a day?”.
     
    “But if you are an employer who needs labor in order to function, you have three options before you.”
    You can come up with a business model that involves paying staff a decent wage. If the only way you can make your business work is by paying staff a pittance, then you don’t have a decent business to start off with. You’re either offering a product people don’t want, charging too little for your product, or paying the people at the top too much.

  4. Jeff, the argument can swing in the other direction too – is 12% too high? How about 4%? 3% 1%? Why not abolish all taxes and have all infrastructure, armed forces, schools, etc paid for by private means? There’s no police now and if you can’t hire your own private protection then bad luck. You can extend any argument to an extreme, far beyond what anyone was actually suggesting. Whether their actual suggestion is stupid may remain in question, but pointing out the absurdity of doubling, tripling or multiplying by a hundred their suggestion doesn’t in itself make what they were actually suggesting stupid.

  5. If you want to make sure fast food workers are paid $15/hr, you’re more than welcome to start your own fast food restaurant and pay your employees $15/hr. If you’re not prepared to do that…then please shut up.

  6. Living  wage argument is about increased taxation by stealth. By raising the wage, you raise how much of that money is taken in taxes.

  7. Robert- And I would say back “keep it clear.” Your statement wasn’t. And isn’t. What do you mean by “avoiding paying taxes?” I am a business owner. How is this to be accomplished? Cash payments? How would cash disbursements on a large scale be accounted for? This is not as simple as you seem to think.

  8. Did anyone else have a problem understanding me? What is your intent? Do you hire people with the intent of avoiding paying taxes? If you think this is not that simple, please explain. I am willing to listen.

  9. Andrew, in your first reply you did a nice job of taking Pastor Wilson’s little thought exercise and trying to refute it by comparing apples to oranges and then apples to pomegranates. If you want to argue an apples to apples comparison you would probably have to go to the opposite extreme using the original subject; that is “what if the minimum wage was lowered to zero.  Now if, in your mind, that scenario would lead to people working for $0.00 per hour then I would have resort to a verse from Proverbs.  But to all who are in favor of a minimum wage increase, my question to you would be “What EXACT figure should the minimum wage be, and why?”
     

  10. Camp Director, it is common for employers to hire illegal aliens to work full time.  The employer pays in cash, does not list those illegals on his accounts and avoids paying social security, health care and other state and local taxes.  To be clear these are not day laborers in front of Home Depot or the local job office; they are full time or part time employees that show up at the  same job all the time.  There is nothing wrong or difficult in paying employees with cash.  Bookeeping is bookeeping no matter if the payment is electronic, check or cash.
     
     

  11. St Lee, the minimum wage is modern slavery.  Those  who advocate the minimum wage advocate slavery for the workers.  For example, if there were no minimum wage, businesses would offer a wage for workers.  If no one shows up for the  listed price, the employer would bump the wage to what people would accept to work for him.  A real life example occurred in Washington state when the feds ran all the illegal workers off.  The apple growers needed pickers and advertised at the illegal wage rate — no one showed up to pick apples.  The wage was advertised at $10/hour and a few locals showed up but not enough to pick the crop.  The wage kept going up until it reached a realistic figure just below $20/hour.  Another real life example is McD’s in Aspen, Colorado.  Workers wouldn’t work there at the minimum wage because they couldn’t live in the Colorado mountians at the minimum wage.  As a result the Aspen McD’s pays really well.  Abolish the minimum wage.

  12. Robert, maybe the question itself isn’t unclear as worded but it’s hard not to suspect that you’re aiming at something other than the obvious answer of “No,” because as a simple question it seems absurd. No one ever does or would hire people to avoid paying taxes. It doesn’t make any sense to do so in any respect. So what’s “unclear” is what you’re getting at by asking the question, not the very simple question itself.

  13. StLee: “In your first reply you did a nice job of taking Pastor Wilson’s little thought exercise and trying to refute it by comparing apples to oranges and then apples to pomegranates”
    No, I was simply pointing out that it’s a strawman to paint the other person’s view as “If an extra three bucks on the minimum wage is good for the economy then an extra thousand bucks would be REALLY good for the economy”. You may reply that he wasn’t saying that, he was actually offering an argument ad absurdem, but it doesn’t work as that either, as it ignores that there may be a sweet spot or optimum amount, as in the examples I gave of a speed limit for safe driving, or calorie intake for healthy eating. Perhaps the minimum wage shouldn’t be included in the same bracket, but Pastor Wilson offered no argument to make that case – he just assumes it doesn’t, which is begging the question.
    I don’t need to tell you what that amount might be to point out that Pastor Wilson’s argument against a rise rests on a fallacy. And there may be great arguments against a minimum wage. But I don’t think Pastor Wilson has just offered one.  

  14. Jane: ” No one ever does or would hire people to avoid paying taxes. It doesn’t make any sense to do so in any respect.”
    What, no-one ever hires people cash in hand, off the books, in order to avoid paying tax? How do you know? Are you sure?

  15. When I was 14, I got my first job washing dishes at a local restaurant. The restaurant owner paid all his employees in cash as “contract workers” so he wouldn’t have to pay minimum wage. I got $2.50 an hour. It was my first job. I saved enough to buy my letter jacket and my class ring. I was happy to work for what I was being paid; he was happy to pay me that mutually-agreed-upon amount. Everyone got what they wanted; it’s just that the government didn’t get as big of a cut.

     
      
     
     

    If the owner had been forced to pay minimum wage, he probably would have simply done away with having a person wash dishes, bought a dishwasher machine, and had one of the cooks run it. As for me, I’m glad that I was able to have that opportunity to earn some money, learn some responsibility, and gain some work experience that I wouldn’t have gained otherwise. No one was harmed in the process; it was all very voluntary.
     
    A few months later I applied for a job at the local grocery store because they actually paid above the current minimum wage of $5.25 an hour. Once again, I was happy to do the work for that amount, the employer was happy to pay it, and everyone won. The great thing is that I wasn’t forced to continue working at the restaurant. As soon as I was no longer willing to work for what I was being offered, I was free to look somewhere else for a higher paying job. The funny thing is that neither employer was actually paying any attention to the official minimum wage. They were simply paying what they thought was a fair wage, and I was agreeing with them by accepting the job.               
     

                

    tl;drEmployers voluntarily hire workers and workers voluntarily work for an agreed upon price. There is no need for a third party like the government to come between a simple agreement between two people and make it more complicated by adding an element of coercion.

  16. Dave, while I agree with your assessment that the minimum wage should be abolished, I have trouble making sense of your statement that the minimum wage  is modern slavery.  In fact I would have to put it in the same category as a statement from Minnesota Vikings star running back Adrian Peterson, who during the lockout of a couple years back made the astounding claim that the NFL was modern day slavery.  ….no, I take that back.  I only find your comment illogical.  Peterson’s was just plain stupid.
    As for the claim that it is common for employers to hire illegals and pay them cash, I find that to be hard to believe unless they are operating so far outside the law that they are willing to risk prison for tax fraud among other things.  No doubt there are such entities, but I doubt that they are common or what anyone would consider legitimate  businesses.  My guess would be that the majority of businesses employing illegals do so after being presented with false social security information by the potential employee.  If that is not the case, then a quick call to the IRS would likely clean up a lot of the wholesale criminality you describe.

  17. Andrew, so you are saying you don’t know what the minimum wage should be, or even that there should be one, just that you are sure that it should not be high enough to expose how foolish such a law is.  OK, I get it.

  18. Lee, people do this. Atlanta Constitution has an article in today’s paper about it. Rick. if you had slipped on the floor and had hurt yourself at 14, what would have happened to your boss?

  19. To the desk of Andrew Ryan:
    You don’t like the argument eh? What about this one? http://www.thebigquestions.com/2013/12/06/blast-from-the-past/ ?
    The minimum wage is a tax on the people who would employ low skilled workers. To avoid paying it the employers have to hire people worth the new minimum wage, so unemployment goes up, or they go out of business. To argue it’s good to do this, necessarily means its good to do it a lot. So the argument Doug put forward stands.

  20. No one ever hires people in order to avoid paying tax, they hire people to do the job. How does hiring people reduce your net tax bill?

  21. Andrew, You’re getting beat up by the libertarians here, but your argument is the only clear one that has been presented in this thread. Doug’as original argument was specious and there certainly may be a “sweet spot” in the argument for a minimum wage. The “invisible hand” of the market sometimes works well, some times not so much. It is laws like the minimum wage that keep the ever concentrating power and wealth that the market produces from getting out of hand. 

  22. Andrew Ryan, when you posit a sweet spot, you are inevitably positing 2 or more competing effects operating on different scales so that there can indeed be an optimum.  The Laffer curve is an example of this.  As tax rates go you get a lower percentage of the people’s income, but with more incentive for people to put their money at risk, you get more income.  As taxes go way up you get more percentage of (declared income) but de-incentivize people from either making more money or telling you about it.  The two effects ought to have an optimum as far as money to the treasury….assuming that is what you want to maximize (a debatable point).

    But BHO said nothing about competing effects and neither have you.  What are the pluses and minuses and by what standard is the sweet spot.  Doug is responding the the fact that *as stated* BHO feels it’s axiomatic that raising the minimum wage is good with (implicitly) absolutely no downside.  Unless you can quantify that sweet spot and the winners and losers you are using unequal weights and measures, pushing it up by sentiment, and ducks….and bunnies.  Don’t forget the rights of the owner in the parable of the vineyard as you work through those things, either.
     

  23. @Robert. You said “Rick. if you had slipped on the floor and had hurt yourself at 14, what would have happened to your boss? ”
    I’m not really sure what you’re asking. If you’re asking would my parents have sued him, the answer is no. I grew up hearing my parents talk often about how ridiculous it was that people sue over ordinary accidents. If you’re asking if he would have gotten in trouble for hiring a 14-year-old, the answer is no again. It’s legal for 14 year olds to work in the state of VA. If you’re asking would he have gotten in trouble when the police realized he was paying workers under the table, then the answer is no once again. He payed all his worker that way. It was an extremely small town (the whole county had a population of less than 5,000) and as the only restaurant in town, it’s the place where the sheriff and deputies ate every day. Everyone in town knew that the owner paid his workers in cash. No one thought it was a problem. One of the virtues of small town life I suppose. People normally mind their own business about things like that.

  24. Minimum wage laws have shown time and again to actually hurt the economy, job growth, and worst of all, the people it was designed to help. Instead of talking about hypotheticals, we actually have real life examples of the effects of minimum wage laws on the economy and jobs.
     
    http://www.heritage.org/research/testimony/2013/06/what-is-minimum-wage-its-history-and-effects-on-the-economy
     
    “The Democratic Governor of American Samoa, Togiola Tulafona, harshly criticized this GAO report for understating the damage done by the minimum wage hike. Testifying before Congress Gov. Tulafona objected that “this GAO report does not adequately, succinctly or clearly convey the magnitude of the worsening economic disaster in American Samoa that has resulted primarily from the imposition of the 2007 US minimum wage mandate.”[25] Gov. Tulafona pointed out that American Samoa’s unemployment rate jumped from 5 percent before the last minimum wage hike to over 35 percent in 2009.[26] He begged Congress to stop increasing the islands’ minimum wage”

  25. St Lee, there is a restaurant right here in Moscow that had an illegal alien cook.  The boss knew he was illegal but kept him around so that the restaurant meals were cooked at an extremely low cost for the boss.  One of my kids worked there and several times overheard the boss threatening to turn the cook over to ICE if he complained.  When the boss felt like it, he would refuse to pay this cook even though the cook had his two children with him here in the states.  This is just one example.  In Colorado, the illegals working the fields ran when ICE started working in Nebraska.  The Colorado farm association lobbied the Colorado legislature to allow low risk prisoners to work the fields.  After the law was passed the association representative stated that paying prisoners was more expensive than using illegals but not as expensive as paying what it would cost to have Colorado citizens work.  There are many owners who do not fear fines and rely on their Philadelphia lawyer to keep them out of jail.

  26. So, DC, since you deem Andrew’s argument the only clear one here, surely you can answer the question I posed:  What EXACT figure should the minimum wage be, and why?

  27. I am sorry that you think the minimum wage is not slavery.  The minimum wage sounds good but poor black teenagers have few work skills.  Managers don’t want to hire those teenagers because they are not worth as much as the minimum wage forces the establishment to pay them.  The minimum wage is known as a job killer for black teens.  When they can’t get a job, they are forced to stay on the welfare plantation.

  28. Jane, people who hire illegal aliens do so for both reasons, to do a job and for as little as they can get away with. If they can dodge state and federal taxes, some will do that in a heartbeat if it means hiring an illegal. There are supposedly 11 million people in this country who work for such people. Look at the three links I posted. I didn’t have to look hard to find them. One of them is even from today. These are forty hour a week jobs.

  29. Robert: Richmond COULD have gone after my boss. But thankfully Isengard/Richmond was far enough away from the little Shire of Craig County, and the people there had a healthy suspicion of bringing in outsiders. My grandad used the word “foreigners” to refer to anyone from outside the county. Of course that has been nearly 30 years ago, and I imagine that older generation has passed and sadly left behind a new generation full of Sharkey’s men who love Isengard and Mordor.

  30. I think Doug’s argument is reasonable. No one has shown how raising the minimum wage actually helps the economy, and short of that pushing the amount further to illustrate a downside is permissible. Andrew claimed this specious but I fail to see how? // ‘ Presumably if someone proposed that reducing the speed limit on a road by 5mph would reduce accident deaths, you’d reply “Why not reduce it by 45mph, or ban all cars?”. Or if someone suggested that cutting 100 calories a day from your diet would help combat obesity, you’d reply: “Why not reduce it by 2000 calories? Why not just eat a carrot a day?”.’ // Both his examples confirm Doug’s point. Doug is taking the extreme example and saying that smaller changes in the same direction may cause the same problem. If slowing down by 45 mph decreases accidents then decreasing by 5 mph may also decrease accidents. It illustrates the point well, but people may argue against lowering speed limit  for other reasons. The second argument is even more obvious: decreasing calories by 2000 a day will definitely work, thus  100 may also.  // There may be reasons for raising the minimum raise, but improving the economy is not one of them.

  31. StLee: “Andrew, so you are saying …”
    My post was quite clear, and was nothing like your attempted summary. Try reading it again.
    Bethyada: “The second argument is even more obvious: decreasing calories by 2000 a day will definitely work”
    Not if you’re only eating 2000 calories to start with! That would kill you. But that doesn’t mean a 100 or 200 calorie reduction wouldn’t be healthy. The fact that an extreme addition/reductio in something is incredibly harmful in no way negates the benefit of any addition/reduction at all. It’s a simple point, one that no poster here was addressed/rebutted.
    Nice to see all the libertarians advocating survival of the fittest by the way on a Christian’s blog. Normally I hear Christians painting that as an atheist viewpoint!

  32. The speed limit argument is not analogous to the minimum wage argument because, unlike the minimum wage argument, you can define competing issues:  Marginal benefit in safety (and fuel) vs marginal cost of time (and an (in)appropriate degree of state interference).  We are not perfectly safe if we all stay home and do nothing.  On the other hand, it is acknowledged by all that the benefit of a minimum wage increase is an increase in wage by some workers you see, and acknowledged only by some that the cost is the invisible but real cost of workers not making any wage and businesses not producing as much as they could and consumers paying more for the same product.  The costs always are higher than the benefits and only grow with an increase in the minimum wage.
     

  33. Robert — oh, you’re talking about hiring illegal aliens as opposed to hiring people legally. You were talking about “hiring people” in your original question, that’s why I responded as I did.
    One might hire illegals for a variety of reasons, but yes, not wishing to pay the employer’s share of payroll taxes is no doubt one reason why people do it.

  34. St. Lee, That is the million dollar question. Where is the sweet spot? There is no clear answer to that. In medical training the attending physicians ask, “How much fluid do you give a dehydrated patient?” The right answer is, “Enough.” That’s the answer, because there is no known correct answer. You make the changes, try not to overshoot and stop when you see the effect you want. That would mean that huge jumps in the minimum wage would not be wise, as you would likely overshoot and see unwanted “side effects.”

  35. Andrew, I used your example to illustrate that it reinforces Doug’s position. Your response is to insult me by saying I advocate Darwinism of the poor and am a defender of godless principles. The point is not—counter your assertions otherwise—the minimum wage is obviously biblical and there is no discussion; rather it is does the minimum wage truly serve the poor? Many of us are aware of minimum age advocates who wished to keep the poor from “their” jobs, or are using faux-compassion for the poor to advance their socialist agenda. Many who truly care for the poor also advocate a minimum wage but does it really do this, or are they economically illiterate? Sincere false beliefs can be enormously damaging. I have some sympathy with a living wage, but when I look at how it is defined there are many assumptions I don’t buy.  // Looking at your analogy more closely. Doug’s minimum wage analogy says that an increase in a minimum wage by a few dollars is economically damaging if we compare an increase in many dollars. This is partially because the current minimum wage is already thought to be economically damaging. Your analogy was comparing a 100 calorie decrease to 2000 calorie to combat obesity. But if an obese person cuts back 2000 calories per day they will lose weight. No obese person eats only 2000 calories and if they did, then yes eating nothing will make them lose weight. Of course, once they are no longer obese they do not need to restrict their diet. Given this is the case one may argue that 100 calorie deficit may also benefit them.

  36. One thing I never see is advocates for minimum wages for small business owners. Many starting out work long hours for minimum income. On an hourly rate get less than their workers. And some of those businesses fail so the person has essentially worked for negative income. And yet we still hear demands for that same person to pay his workers more despite them already making more than the owner with no risk to their own livelihood.

  37. @bethyada: Agree 100%. Let those who advocate for a ‘living wage’ or increased minimum wage try to start their own business. I’m trying to build one now. It’s a first effort. The regulations, taxes, red tape, et. al. are absolutely ridiculous. It is a wonder that any small business survives. As it is we’ve been pumping all the money back into the business to grow it. Not to paint with too broad a brush, but I believe many of those advocating these redistributive positions are in bed with the biblical sluggard.

  38. Bethyada: “Your analogy was comparing a 100 calorie decrease to 2000 calorie to combat obesity. But if an obese person cuts back 2000 calories per day they will lose weight. No obese person eats only 2000 calories and if they did, then yes eating nothing will make them lose weight
    I could equally have said cuts back 20,000 calories, or indeed talked about increasing an anorexic patient’s diet by 30,000 calories. And you said that once the obese patient is better then they don’t have to restrict their diet any more. But the original blog above wasn’t talking temporary, was he? He wasn’t talking about a one-off $9,000 payment to a poor worker, but a permanent increase of thousands of dollars an hour. So the correct analogy would be a permanent change in diet. And yes, while cutting a 1000 calories a day off a person’s diet may benefit them, reducing them to eating a carrot a day will harm them sooner or later.
    The point remains that you can’t rebut the benefit of an increase/decrease of Y by pointing out that a 1000Y increase/decrease would be damaging. It doesn’t work as an argument.

  39. David Douglas: “On the other hand, it is acknowledged by all that the benefit of a minimum wage increase is an increase in wage by some workers you see
    …and then there’s a knock-on benefit as that person’s spending power increases and they can spend more in local businesses, most of which will similarly be hiring low-income workers. The Walmart workers can now spend more in McDonalds and vice versa. But what about those shops then putting their prices up – aren’t we all then back at square one? Not really, because the percentage of a Big Mac’s cost that goes on wages is tiny, and a 25% increase in wages would translate to a tiny percentage increase in cost, even if McD passed the whole cost of the min wage rise on to the customer.
    All this is getting off the topic of my original critique of the Pastor’s argument, which still stands.

  40. Andrew,
    Maybe it would help to remember that the work an employee does is an economic resource, and subject to the same economic laws as the BigMac. Charted on a supply-demand curve, raising the price of any good or service reduces the number of buyers willing to purchase that good or service.
    ____________________________________________________________________________
    When the minimum wage is artificially increased beyond the natural break-even point established by market forces, this raises the cost of doing business, and employers are forced to cut costs somewhere in order to maintain their current profit margins. One simple and popular way to do this is to purchase less labor than they’ve done in the past, either by laying off workers, cutting their hours, or simply choosing not to hire any more. This is why an increase in the minimum wage actually results in a net job loss.
    ____________________________________________________________________________
    I understood Pastor Wilson’s point to be simply that if the fundamental market realities don’t factor into our economic decisions and can be set aside as inconvenient or oppressive or whatever, then we might as well go all the way and just award everything to everyone. The larger point is that merely saying that an increase in the minimum wage is generally good for the economy doesn’t make it so.

  41. Bethayda: In regards to small business owner vs. employee, the shop owner may make less per hour than the employee, but she also has unlimited profit upside. The employee enjoys no such potential benefit.

  42. bear in mind also that dollars are not the only way an employer pays for labor resources. when wages are set artificially high, this reduces an employer’s ability to offer other (sometimes equally attractive) forms of payment like insurance and other benefits, all of which factor into the cost of keeping his doors open.
    _____________________________________________________________________________
    DCHammer, was that an argument or just an observation? The less risk an individual is prepared to assume, the less reward they ought to expect.

  43. We are going to have to disagree Andrew, I get that drinking a cup of water a day may be beneficial and 50 litres isn’t. But I think that illustrative examples are still valid. Many economists can see the damage of a 10% increase in minimum wages. A 100% does have effects that are obvious to people who deny 10%. This is why the example is used. Now one may argue there are beneficial effects at 10% that offset the negative effects of 10% that no longer hold at 100%. But that needs to be argued. This is what you try to do. But the (potential) benefit for the economy at 10% increase (increased purchasing power which you suggest) does not remove the negative effects of increased wages. You can argue that the net effect is beneficial, but you can’t deny the negative effect that Doug has pointed out. I think the negative effect is obvious at 10% and think the effect at 100% is exaggerated, thus the argument is valid. (I get you don’t, but there is a difference between Doug example is wrong on its face and Doug’s example neglects attenuating circumstances) // As to your purchasing power argument, this seems very Keynesian (from my limited knowledge). As Keynes sees debt as good (or at the worst, benign) and the Bible enjoins us to avoid debt like the plague I have no problems thinking him fundamentally incorrect.

  44. Andrew Ryan: “…and then there’s a knock-on benefit as that person’s spending power increases and they can spend more in local businesses, most of which will similarly be hiring low-income workers.”….Which is tautologically the same as “the person you see” getting paid more.  This is nothing new, its the visible effect of the guy with the job having a new higher wage.  Not to put too fine a point on it, there is no knock on benefit overall since you completely miss the point that the person you don’t see who doesn’t have a job as a result of the new floor for wages loses all his spending power.  The overall result is less money spent on labor and the overall spending power decreases.  It is not beside the point that Doug made and your objection still does not stand.  You have yet to say how you determine a sweet spot and a what point the increase in wage is detrimental.  Others have dealt with the argument you made about marginal cost, which regardless of how small it is, still has the effect of lowering total sales and total demand for labor.

     

  45. DCHammer, perhaps, but what about the fact they are working below a minimum wage? Do you not care that they do not earn a living wage? Is it only workers whose welfare we are interested in? Shouldn’t we care about poor employers?  //  If we only are concerned about potential upsides then apprenticeships should be allowed to run below minimum wage. They are gaining skills in lieu of money while they are being trained (and often bringing in insufficient money to justify higher wages). And employers should be able to offer employees on commission less than minimum wage because there is unlimited upside when paid on commission.

  46. Bethayda, Good thoughts. I agree re:apprenticeship and employees on commission. Not so much re: small business owners, of which I am in a sense one. They have freely chosen a path that frequently requires extended hours and sacrifice in hopes of good future returns. In my business our employees are guaranteed their salaries and bonuses before any owners get paid. Employees however do not share in business profits which may be negative or positive. 

  47. David, I don’t think I do have to give you an exact figure to point out the flaw in the original argument. Any more than I’d need to give an exact ‘calorie reduction’ to counter someone claiming that because eating just a carrot a day would be harmful, there is therefore no benefit at all in reducing your calorie intake by any amount at all. Need to go now but thanks for the discussion.

  48. A beggar I know has kept going in and out of jail for”criminal trespass”, and in and out of the local mental health place.   With his problems, he could do some work, such as picking up cigarette butts from a parking lot, but I doubt his work would be worth minimum wage.   (Maybe if he got saved and learned diligence.)   So the EXISTING mini wage laws tell him not to work.  So instead of producing anything, what he gets has to come from those who have produced something, whether they want to pay him, or not.   (Somewhere in TEAM OF RIVALS–Lincoln bio–Frederick Douglass remarked that if a black hesitated to work, hunger would teach him; which was fine with Douglass.)   Is that a “sweet spot”?  /   /   /   /   /   /   /  
    Search “Jesus is libertarian” and you’ll find a bunch of stuff, pro and con; http://voices.yahoo.com/jesus-libertarian-7724306.html is mine (pro.)

  49. This discussion falls into the category of the the things seen vs the things unseen. The things seen being the extra money in the hands of those who benefit from the minimum wage, while the things unseen are what the business owner could have used that money for to his benefit (i.e. hiring another worker, buying some other good or service thereby benefiting that vendor, or reinvesting in the company). This is all laid out very well in the parable of the broken window (http://en.wikipedia.org/wiki/Parable_of_the_broken_window)
    <br>
    “But if, on the other hand, you come to the conclusion, as is too often the case, that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it, you will oblige me to call out, “Stop there! your theory is confined to that which is seen; it takes no account of that which is not seen.”
    It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way, which this accident has prevented.”

  50. Andrew Ryan has it right with respect to the type of argument employed here, but in fairness Obama’s tweet made the minimum wage seem like a big santa bag full of presents just waiting to be opened.  It might happen due to circumstance that the minimum wage has a net positive effect on job creation, but it certainly isn’t anything a politician ought to be claiming to know.  Didn’t Obama learn anything from the “You can keep your insurance” debacle?

    Many economists can see the damage of a 10% increase in minimum wages.

    Well yeah, but we’ve been listening to economists for 40 years now and gotten stagnant wages and spiraling inequality for our trouble.  While the economic dimension is an important one, it isn’t the only one, and the economic demerits of a policy can be outweighed by other benefits.  In other words, the point of governance is not to maximize the economic function of a country.  A relentless focus on economics to the exclusion of all else has hampered the right for some time; the Ds win on class warfare type arguments not because people are all about class warfare, but because the Ds actually acknowledge their concerns.

    So instead of producing anything, what he gets has to come from those who have produced something, whether they want to pay him, or not.

    He sounds like a genuine charity case, so what is the problem here?  Even if he were to be paid to pick up cigarette butts, in our no-minimum-wage world, there is no way he would ever be able to earn anything approaching a living wage and so would remain a charity case.  The guy seems to have it hard enough, just give him the dough and let him relax.

    This discussion falls into the category of the the things seen vs the things unseen.

    The thing about the unseen is that it is unseen, and we have no knowledge of whether it would have been better or worse.  It is possible that the money spent on increased wages would have been spent on some useful investment, but it is equally possible that it would have been wasted on some useless investment.  Businesses go broke due to bad decisionmaking all the time.  The shopkeeper may spend his 6 francs on new shoes, but he also might spend it on a prostitute. 

  51. “The shopkeeper may spend his 6 francs on new shoes, but he also might spend it on a prostitute.”

    So what, the wage earner also may spend his 6 francs on a prostitute. I have an earlier post in this thread that actually looked at the effects of minimum wage laws on jobs and the economy, which shows that they do more harm than good, with American Samoa being a prime example of the kinds of destruction they can cause. Those on this thread who have been fighting in favor of a minimum wage, have used no facts to bolster their point, just emotion.

    It is very simple to understand. If you raise the minimum wage to $15 an hour as some in the fast food industry want, then what you will see is businesses hiring people who are worth $15 an hour and many of those who now have a job at $7.25 will no longer have a job because they do not have the skill set to justify that cost. They will have priced themselves out of the market.

    I also find it ironic that those fighting for a minimum wage do not even understand the reason it was created. It was to protect white laborers from black laborers who would work for cheaper. This view persisted for quite some time. Here is Senator JFK in 1957:

    “Of course, having on the market a rather large source of cheap labor depresses wages outside of that group, too – the wages of the white worker who has to compete.  And when an employer can substitute a colored worker at a lower wage – and there are, as you pointed out, these hundreds of thousands looking for decent work – it affects the whole wage structure of an area, doesn’t it?”

  52. “The shopkeeper may spend his 6 francs on new shoes, but he also might spend it on a prostitute.”

    So what, the wage earner also may spend his 6 francs on a prostitute. I have an earlier post in this thread that actually looked at the effects of minimum wage laws on jobs and the economy, which shows that they do more harm than good, with American Samoa being a prime example of the kinds of destruction they can cause. Those on this thread who have been fighting in favor of a minimum wage, have used no facts to bolster their point, just emotion. It is very simple to understand.

    If you raise the minimum wage to $15 an hour as some in the fast food industry want, then what you will see is businesses hiring people who are worth $15 an hour and many of those who now have a job at $7.25 will no longer have a job because they do not have the skill set to justify that cost. They will have priced themselves out of the market. I also find it ironic that those fighting for a minimum wage do not even understand the reason it was created. It was to protect white laborers from black laborers who would work for cheaper. This view persisted for quite some time. Here is Senator JFK in 1957: “Of course, having on the market a rather large source of cheap labor depresses wages outside of that group, too – the wages of the white worker who has to compete.  And when an employer can substitute a colored worker at a lower wage – and there are, as you pointed out, these hundreds of thousands looking for decent work – it affects the whole wage structure of an area, doesn’t it?”

  53. So what, the wage earner also may spend his 6 francs on a prostitute.
     

    Of course, but the “seen vs unseen” argument always smuggles in the premise that the unseen is the better outcome.  Without this premise it isn’t an argument for anything, but only a–sometimes useful!–observation.

    I also find it ironic that those fighting for a minimum wage do not even understand the reason it was created.

    That’s the genetic fallacy.  Who cares why the minimum wage was created?  If people are still using those arguments, then point them out where they occur.

  54. “Of course, but the “seen vs unseen” argument always smuggles in the premise that the unseen is the better outcome.  ”

     

    No it doesn’t. The unseen argument is that there are three-parties involved not two. There is the wage earner, the business owner, and the third-party who will not get business because of the lost revenue. So this third-party must be taken into account when doing any economic policy.

  55. David R is driving the nail.  The idea of restricting classes or colors of peoples to poverty is an old one and the minimum wage in America keeps blacks and other poor folks from entry level jobs and out of the work force.  Walter Williams (the black author and commentator) wrote South Africa’s War Against Capitalism, a book on South Africa’s discriminatory economic policies against blacks.  Walter Williams highlighted the fact that in 1926 minimum wage laws were passed in South Africa to keep the blacks out of the work force. 

  56. Andrew Ryan:  Ok you don’t have to specify a particular “sweet spot” for your argument to work (Laffer does not for his curve as far as I know).  But you do have to specify a mechanism to show that there could be a sweet spot which you refuse to do (and which Laffer does for example).  There has to be some competing effect that keeps an obviously bad minimum wage effect at the extreme wage example from being a simply a much less bad effect at a less extreme wage proposal.  And your diet example proves my point–not yours.  Lower calorie intake leads to a lower steady state weight.  The competing effect is that bad things up to death occurs below some calorie intake.  A competing effect (probably several, actually).  Were is the competing effect?

    As for assuming that the unseen is being better…  As someone already said we are only saying you have to “see” or account for all the (obvious) alternative effects.  And saying the unseen person who would have more money could mis-spend….how specious!  The glazier fixing the broken window or the $20/hr minimum wage guy can “mis-spend” (whatever that means) it as well as anyone else.  Its not a good argument when the same concept can be used against your position.
     

  57. Please note I am addressing Andrew Ryan in the first half of my paragraph and someone else’s (not Andrew’s, I don’t think) in the second half.  I forgot they would be jammed together and should have had 2 separate posts.  My apologies to Andrew for the appearance that he owns everything I am arguing against.

  58. Its not a good argument when the same concept can be used against your position.  

     
    Which is entirely my point, that the “seen/unseen” argument can be made in any direction you want.  I’m glad you agree.

  59. So this third-party must be taken into account when doing any economic policy.

    Well in that the liberals agree entirely with you.  They all think that the rich should pay more for wages and less for yachts.  Simply pointing out that more wages = less yachts is not going to sway them.

  60. But Matt, in your scenario, the society is still richer to the tune of one prostitute.  That’s the point of the broken window illustration.  When the window isn’t broken, one additional person gets what they want.  Whether we approve of what they want is economically irrelevant.

  61. Matt,  Perhaps the concept of seen and unseen is to short hand for you.  Let me explain.  First I agree things that don’t happen are generally in the category of “who knows? or who can know?” But that is not how we are using it.  In an a priori sense we are using it to consider 2 alternatives.  And we claim that often what happens is people focus on the alternative under question (raise the minimum wage…guys/gals make minimum wage…declare victory and go home) and forget about 1) what happens to everyone  and 2) what happens over the long term and 3) how does that compare to not doing anything (or lowering the minimum wage).  In real life we call this, well coping. We, all, including small  business owners employing minimum wage workers chose one thing and not another in response to stimuli.  .  For some reason.  Hopefully a wise one. (Economically this is usually you maximize utility and that means people will generally buy more of what costs less and people will offer more of what pays better.) After a decision is made and an act accomplished we consider things seen and unseen a’ postiori.  It’s been done but let’s think about it from the viewpoint of the decision point:  The seen things are the choices made and obvious consequences.  The unseen things are 1) the alternative not chosen and those obvious consequences and 2) the less obvious consequences of our choice.   If a bridge is built as a make work project after the fact everyone can admire a beautiful bridge which is a public asset and also remark that it created a lot of work for people.  The “seen”.  The unseen is all the other work that would have been made if people had kept their own money instead of pooling to build a less than useful bridge.  Spending that same amount of money differently would have created a different set of work for different people…providing desirable things for the purchasers.  It also misses other choices of using the money corporately that would be more useful not merely as a make work project. You can put yourself back in time and consider it a’ priori.  The unseen/missed opportunities are still very real. [This is all from Hazlit]  Finally, can’t you at least acknowledge that if the glaiser doesn’t have to install a window that isn’t broken the money remains to be used by owner for some other purpose?  If you don’t raise the minimum wage the status quo prevails.  If you do, you increase the price of labor which reduces the demand for it.  The owner may choose to do something else with his money than pay more for labor.  The guy not hired as a result is very real, if unseen.

  62. Finally, can’t you at least acknowledge that if the glaiser doesn’t have to install a window that isn’t broken the money remains to be used by owner for some other purpose?

    Of course the money for wage increases isn’t generated out of thin air, but the point I’ve been trying to make is that everyone acknowledges this and it isn’t an argument for anything.  Liberals think the rich should spend more on wages, which entails spending less on other things the rich want, that by their analysis of the last few decades have lead to divergent economic outlooks for different sectors of the population.  So they’re doing exactly what you all want them to do, you just don’t like their conclusion or their biases.  The only way you can make this argument work is by assuming that the effects of a minimum wage are inevitably worse than the effects of anything else that the resources could be used for.  Liberals often do this too, just in reverse.

  63. Real shame that all the formatting goes out of these posts, jumbling them up into one big paragraph! Anyway:
     
    David douglas: “And your diet example proves my point–not yours.”
    I really think it doesn’t, and I explained why several times. If you’re eating too much then cutting back on your calories will be beneficial to your health. You could draw a graph of what that benefit would be, starting with a low benefit cutting back 20 calories, moving up to a high benefit for a greater number (depending on how much you’re currently eating) and then dropping from ‘beneficial’ to actual ‘detrimental’ if you cut too much, until you have death within a couple of weeks if you cut to less than, say, 200 calories a day (or whatever).
    I don’t see how this doesn’t illustrate my point.
    “Where is the competing effect?”
    For a start, it is the Pastor’s argument, so it is HIM making the assumption – that there IS no competing effect. The analogy between wages and calories is actually a good one – just as a body can cope with a small change in a factor but can be killed by a huge change in the same factor, a company can adapt to a small rise in wages but would be ruined by a huge one.
    Obviously a company can’t pay staff a thousand bucks an hour. It’s NOT obvious that a company can’t pay staff an extra 50c an hour (or whatever it takes to boost up to a minimum wage). You can argue that the rise will hit its bottom line, but that’s not the same as going bankrupt immediately due to not being able to pay wages. Another difference between $1000/hr and 50c/hr is that in the former the staff could quit after a few days on the job! Another difference is that in a community where all the poorest workers have a small increase in wages, that gives them more money to spend in exactly the sort of stores that would be paying the minimum wage, benefitting those stores without forcing them to raise their prices by a large amount (see my previous Big Mac price example). Whereas if all the poorest people got a huge pay rise, they’d stop shopping in those stores completely!

  64. Matt, it’s not that conservatives disagree on wages vs. yachts, it’s that they know that the economy doesn’t actually work that way.  Take, for example, a wealthy investor who already owns two or three yachts.  He wants another, so he invests in Minimum Wage Company (MWC) and High Tech Company (HTC), each of which provide a 5% return on his investment.  But then, minimum wage is raised, so profits at MWC slip to 4% (that’s the goal, right?  More money for wages, less for wealthy investors?).  So what does our yacht owner do?  He takes his money out of MWC and puts it all into HTC, where gets a better return.  He’s still sitting pretty, but now MWC has lost substantial capital, and able to provide fewer minimum wage jobs.  Envy-driven economics are bad for the poor.

  65. Jonathan, who says that, say, McDonald’s would take a 4% profit hit if a minimum wage were introduced? If the customers who eat there have got more cash thanks to the minimum wage, profits could rise for all you know. And where did you get the 4% figure from anyway? What percentage of a burger’s cost pays the lowest paid workers’ wages? It’s a small figure. Higher ages also equal staff who stay longer and therefore better customer service.

  66. Andrew, my example was based upon Matt’s claim that the goal of raising minimum wage was to reduce the excessive yacht-buying that’s going.  It needn’t, of course.  Costs could be trimmed elsewhere, or prices could go up.  I’m not sure many people, especially the poor, consider higher prices for goods a desirable thing.
                                                                                                                                                Your claim about higher wages leading to better customer service is interesting.  There are restaurants (for example) who do pay higher wages and provide better service.  If people want better service, they can just go get it.  I do all the time.  Wherever there’s sufficient demand for better service, an entrepreneur will be there to provide it, provided he can get sufficient capital. We really don’t need better service by government coercion.

  67. Matt, it’s not that conservatives disagree on wages vs. yachts, it’s that they know that the economy doesn’t actually work that way.
     

    I imagine most liberals outside of the communist wing realize that the rich aren’t out buying yachts with all their spare cash.  Obviously some of it will go into investments, some of which are probably good, and those investments could be negatively affected by a minimum wage hike.  But one, there’s no telling what actually happens to our two companies here.  MWC might lose value, because expenses increase but revenue stays the same, but then the new minimum wage might mean they invest more in worker training/quality and end up making even more than they did before.   Also we’ve had a gradually decreasing minimum wage, wrt inflation, for about 40 or so years now and it has not produced prosperity at the low end, but quite the opposite.  On the other hand, in the days of relatively high minimum wage those wealthy investors were making a lot less relatively than they do now.  The empirical evidence is not on conservatives’ side here.

  68. Matt, I’m intrigued by your argument about companies increasing profits because they invest more in worker training after a hike in minimum wage.  They of course could do this without a minimum wage hike.  Why don’t they?  One on major company would have to do it, and the rest would be forced to in order to stay competitive.  Don’t they want more profits?  Alas, poor simpletons, sitting around, entirely ignorant of how to run a business until Washington tells them how.                                                                                                                                                      As for your empirical evidence, I’m not myself familiar with the numbers.  But I do know that correlation doesn’t mean causation.  I can imagine a perfectly conservative explanation for the data.  An increase in capital means a lower investment return (less demand for capital), but higher wages (more demand for labor).  A decrease means the opposite.  Minimum wage tends to track at least somewhat close to actual low labor prices, since to run below them would be useless and too far above them catastrophic.  So minimum wage, approximating the actual value of the cheapest labor, is inversely proportional to investment returns.  That’s straight out of Adam Smith.  It may not be what actually happened, since again, I’m not familiar with the data.  But it explains the conundrum you presented just fine.

  69. “Alas, poor simpletons, sitting around, entirely ignorant of how to run a business until Washington tells them how”
    No-one said they’re ignorant of how to run a business. And I’m making no claims that businesses will get some massive benefit by having a minimum wage imposed on them. We’re discussing whether it will HARM them, and also whether it would ultimately also harm the workers it’s meant to help.
     
    Jonathan: ” Your claim about higher wages leading to better customer service is interesting.  There are restaurants (for example) who do pay higher wages and provide better service.”
                   
    That backs up my point then, which was to assume ‘introduction of minimum wage’ automatically = ‘lower profits’ is just that: an assumption. It is a black & white view that ignores many competing factors, many of which I’ve already discussed.

  70. They of course could do this without a minimum wage hike.  Why don’t they?

    Because they don’t think it is worth it, since their labor costs are only X.  Now they are 1.3X (or whatever) and suddenly it makes more sense.  They might do it anyway though.  For that matter, they might do it and it might fail, and MWC just goes out of business.  The uncertainty of what will happen is the point.

    Alas, poor simpletons, sitting around, entirely ignorant of how to run a business until Washington tells them how.

    Well yeah, sorta.  That is, businesses make bad business decisions all the time, and a change in the regulatory environment can incentivize good business decisions that wouldn’t otherwise have been made.  It’s foolish to rely on this necessarily happening as an argument for a policy, since no mortal human could possibly predict it accurately, but it is equally foolish to rely on its opposite as an argument against a policy.  Either way you run the risk of looking stupid because things didn’t quite turn out the way you thought they would.

  71. Another point is that many opposers of a minimum wage would also oppose legally available cannabis, cocaine, crystal meth, and also oppose legal prostitution. Not all of course, but many would.
    If they said drugs and prostitution were immoral, and you replied with talk of the free market, and how their opposition is an impediment to business, they would say you’re missing the point – immoral it remains.
    I feel pretty much the same when people justify paying six bucks an hour for a job (or whatever) with reference to the free market, and how it might hit the bottom line of the employers.

  72. I think that a man who works 40 hours of productive labor a week should be able to keep his family out of poverty with his wage without his wife having to work too.

    That’s what I think the minimum wage should be set at.

    We could then have an argument about what level “poverty” is (and a shorter one about family size.

  73. I think that a man who works 40 hours of productive labor a week should be able to keep his family out of poverty with his wage without his wife having to work too.

    I think all of us on both sides of the debate want this to be the case. The problem I see with solving this problem with minimum wage is that it actually hurts the very people it is trying to help by pricing them out of a job.

        

    Take two people, one whose skill set is worth $8/hr and one who has a skill set worth $10/hr. If you raise the MW from $7/hr to $10/hr, now the $8/hr guy will suddenly find himself without a job. Now a company may give that employee a raise if they have invested time into his training, so that extra $2/hr is worth it instead of training somebody new, but if he now has to find a new job, his options have become very limited and his work prospects that much harder.

     

  74. Andrew, I never claimed an increase in minimum wage automatically reduced profits.  That was Matt’s argument when he pitted higher wages against yachts.  I was trying to show why such a scheme wouldn’t work.  What I’m getting, though, is that both you and Matt think that the general effects of a minimum wage hike would be entirely unpredictable, but that you, at least, think it a moral necessity, probably agreeing with Jonathan (the other one) that a man who works 40 hours of productive labor should be able to keep his family out of poverty.  It’s a nice goal and one I support, though not I think, a moral necessity (a famine that plunges an entire nation into poverty is certainly unfortunate, but not a moral failure).  But the key, in my mind, is “productive” labor.  How do we decide what’s productive?  When other people are willing to sacrifice their own labor to partake in it.  How do we know when they are? When they exchange for it freely.  A landscape painter who spends 40 hours a week painting is productive only when other people want those paintings, and are willing to trade for them.  If he can’t make enough to support his family on that, then he isn’t being productive enough.  The free market has a built in mechanism for assessing the value of labor.  

  75. JJ: ” It’s a nice goal and one I support, though not I think, a moral necessity (a famine that plunges an entire nation into poverty is certainly unfortunate, but not a moral failure).”
    That depends on what caused the famine! Many Irish claim the great Potato Famine was deliberately caused by the English. No idea if that’s true, but if it was then it would be a moral failure. Similarly, not helping another nation suffering a famine could be seen as a moral failure. But a natural famine in itself isn’t a moral failure. That said, it’s hardly analogous to an economic system that we’re able to influence, if not actually control. And a freelance artist, working for himself, isn’t analogous to an employee either, in my view anyway.

  76. DavidR: “Take two people, one whose skill set is worth $8/hr and one who has a skill set worth $10/hr. If you raise the MW from $7/hr to $10/hr, now the $8/hr guy will suddenly find himself without a job.”
    We’re talking about manning a till at a fast food joint! The 8 bucks guy will still have the skills to do the job, he’ll still have a job. His skill set will now be worth 10 bucks an hour.

  77. Andrew, that is not how economics works. When you raise the cost of beef, you buy less beef. And when you raise the cost of labor, you buy less labor. And we have data to back this up. The minimum rage was increased in 2009, and what we see is that greatly effects the most least skilled, least experienced, and least educated workers.

        

     
    http://economix.blogs.nytimes.com/2010/03/10/did-the-minimum-wage-increase-destroy-jobs/?_r=0

    http://www.aei-ideas.org/2013/02/lets-review-the-adverse-effects-of-raising-the-minimum-wage-on-teenagers-when-it-increased-41-between-2007-and-2009/

  78. Andrew, agreed on the famine issue.  I have a question for you, though.  Do you believe that there is a market value for labor?  What defines this value?  Does it approximate the actual value of the labor to those who benefit from it?  Your last post suggests that you believe the minimum wage fixes the actual value of labor, and I wonder if you really think that.

  79. DavidR: “Andrew, that is not how economics works. When you raise the cost of beef, you buy less beef.
        You have a simplistic view of economics. You’ve not heard of Giffen  Goods?

  80. The free market has a built in mechanism for assessing the value of labor.  

    That’s true, but beside the point.  Our problem is that a growing number of people are unable to earn a living wage with the work that is available and for which they are qualified.  Trends like automation and globalization have wrecked the low-skill job market in this country.  Long term, we may be able to do something less intrusive than a minimum wage increase, but something needs to be done for these people right now. Minimum wage may not be the best option, but the common Republican approach of economic ideologizing is even worse.

  81. Matt, I’m not quite sure what you mean by “economic ideologizing,” but you make a valid point.  Automation has replaced many low skilled jobs, because in those cases a machine is less costly than hired labor.  Likewise, many jobs are shipped overseas because labor is cheaper there.  This is a problem. What perplexes me is your suggestion that the solution is to raise the cost of US labor even higher.  

  82. Most importantly, few can survive let alone thrive on minimum wage.  In order for minimum wage to work, they’d have to set it at fifteen or twenty dollars an hour.  Just think of what bills add up to these days.  Only a highschooler could afford to work at eight or ten dollars per hour.  Rediculous.

  83. “… You have laid up treasure in the last days. Behold, the wages of the labourers who mowed your fields, which you kept back by fraud, are crying out against you, and the cries of the harvesters have reached the ears of the Lord of hosts. You have lived on the earth in luxury and in self-indulgence. You have fattened your hearts in a day of slaughter.” – James 5:3-5 // “Then I will draw near to you for judgement. I will be a swift witness against … those who oppress the hired worker in his wages … and do not fear me, says the Lord of hosts.” – Malachi 3:5 // “For the Scripture says, ‘You shall not muzzle an ox when it treads out the grain,’ and, ‘The labourer deserves his wages.’” – 1 Timothy 5:18

  84. Matt, I’m not quite sure what you mean by “economic ideologizing,”

    Economic ideologizing is where a person says “I don’t make enough money to live on” and a candidate replies “Well, that’s the market wage for your labor, so go get more skills or reduce your standard of living, or maybe quit wasting it on beer”.  Then person A promptly votes for the other guy.  Fairly or not, the Republicans and the conservative movement have a reputation for this.

    What perplexes me is your suggestion that the solution is to raise the cost of US labor even higher.

    I hadn’t intended to come out in favor of a minimum wage increase, but my last comment does kind of sound like I did that.  So I have to revise: my position is not that the minimum wage is the best way to go, but only that it is the only idea on the table currently and opponents will need a better one if they want to defeat it.  It’s entirely possible that a minimum wage increase could lead to massive automation of service sector jobs, which have up to now been somewhat resistant.  Personally, I’m in favor of the “just give them cash” approach to pretty much all welfare programs.  It’s simple and keeps the bureaucracy down.  The EITC is something like this, and a recent NYT editorial argued that it is a better option than the minimum wage.  It has its own distortions and perverse incentives, but any useful intervention will come with these.  Another idea floated recently is a guaranteed minimum income, that you get just for being alive and don’t even have to work.  Long term, we can reduce globalism (theoretically, no one has yet figured out how to defeat the globalists) but even if we eliminated it overnight automation is here to stay and it would take time for the economy to readjust.  TLDR: We need something now, and it will be something welfarey.

  85. Matt, I saw Joe Carter write somewhere that he would happily get rid of minimum wage in favor of government funded job training.  I don’t think that would be ideal, but it’s worth thinking about, since it should, in theory, increase overall production and wealth, rather than encourage skillessness (how many “l’s” should that have?).  Of course, I’d much rather see non-government funded job training.  I wonder how that could be arranged and made effective.  Thanks for the article, I look forward to reading it.

  86. And Matt, I hope you’ll pardon me attributing any argument to you that wasn’t actually yours.  I did notice you prefacing your statements will things like “liberals will say…” but thought it was just circumlocution.  Sorry for that, I should have been more careful.  Heat of the moment and all that.  It’s been a most enjoyable and stimulating discussion.

  87. Yes, the warning to rich oppressors still holds true.  Greed has increased and businesses do not want to pay people a regular salary.  The middle class continues to shrink and we find that the exceptional character of the country continues to diminish at every level.

  88. David R. – so you’re saying that a man could support his family in, say, New York City (or most any urban location) for $7/hour? Or, as many people on this blog would want it, anywhere at all for $4/hour? And, as I’ve always wanted to know, if a man can support his family reasonably on that (and home school/private school his children too!), then why are so many people here not content with less than 4 or 5 or 10 times more than that, when so many of their brothers and sisters in Christ are struggling with even less?

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