Minimum Wage: Who needs a comfortable life anyway?

[Silver Soul]

We discuss about the minimum wage in U.S as well as certain countries. The federal minimum wage is $7.25 per hour while in certain states is more than that. Washington state is $9.19 per hour for example

In the recent 2013 elections; voters of Seattle, WA voted to increase minimum wage up to $15 per hour at the SeaTac International Airport, NJ voted this year to increase the minimum wage by $1 and tie future increases to inflation.

President Obama gets behind a bill to increase the federal minimum wage up to $10.10 per hour, which is $1.10 more then he previously proposed.

The question is that should we raise the minimum wage and so, at up to what price? Also, how it help citizens when it comes to having more money to spend on?

 

[~Sam~]

I personally think that it needs to go up. It is not possible to live in some places in the US (Like LA) on minimum wage.

 

[BigLutz]

Problem with raising the minimum wage, especially to the levels that Obama wants, is that it ends up hurting those that they are supposed to help most. It only encourages the use of automation to take the job of workers ( Why do you need 10 Cashiers when 1 can watch over a bunch of DIY Check Outs, why do you need someone to take down drive through orders when a computer can, etc etc ), and it raises the price of goods. For a more detailed explanation I will add in this from the Fiscal Times.

And that’s the big problem with these proposals. They don’t make people more valuable on the job market, especially those with no experience or proven skills. Minimum wage hikes make it more difficult for them to find jobs, especially in the short run. The raise proposed by Obama would increase just the straight wage cost for a business by 24 percent in its entry-level positions (and probably in other positions near that level), which businesses would have to absorb in one of two ways. Either they raise prices without providing consumers with a commensurate increase in product or service value, or they have to reduce staff to cover the increase. The former is inflationary and harms their competitive edge, while the latter gives businesses less flexibility to take risks, especially on new hires. Forced to pay a higher cost for employees, businesses will stick with experience rather than look to younger workers entering the workforce.

Consider what happened when Congress last passed a minimum-wage increase in 2007. At that time, overall unemployment was 4.7 percent and the job market favored workers. Among those between 16 and 19 years of age, the jobless rate was 15.3 percent, on the lower end of the range seen during the previous four years, the highest rate of which had been 19.0 percent in June 2003 during the previous recession.

By July 2008, overall unemployment had jumped to 5.8 percent due to the then-moderate recession that had begun in December 2007, but youth unemployment rocketed upward by more than five full points to 20.7 percent. As the wage floor stepped upward to its present level by July 2009, the youth unemployment rate rose to 24.3 percent. And while the overall unemployment rate has declined from 9.5 percent at that time to 7.9 percent now (albeit with a plummeting workforce masking the true nature of chronic unemployment), youth unemployment remains at nearly the same level as in July 2009, at 23.4 percent.

Why has this been the case? When forced to pay more for labor, businesses will insist on getting more value for their money – experience and proven skills, even in entry-level positions. Younger workers never get a good chance to earn their stripes. That has long-term implications for their ability to earn in the future, as well as the social costs of high unemployment and restlessness of youth.

http://www.thefiscaltimes.com/Columns/2013/02/14/Raise-the-Minimum-Wage-and-Get-Minimum-Jobs#page1

 

[Shiny Budew]

I don't think it's a good time to raise the minimum wage: the job market is bad enough as it is for those with little experience, and this would just compound the issue.

What is needed is less automation.

 

[LDSman]

Who sets the value of the work performed?

 

[Cometstarlight]

I think minimum wage should stay as is. They're only going to raise the prices of everything else so it wouldn't be doing anything in the long run except create more inflation.

 

[The Federation]

It's easy to pay employees living wages and still succeed as a business without killing consumers... Look at Costco. Their average wages are $20.00, so it's not impossible. Corporate greed is what drives this fear and speculation, it's been an indoctrinal force in everyone's lives.

 

[Queequeg]

The minimum wage will always be an insufficient wage. An increase in minimum wage will not bring people out of poverty, nor will it have a significant effect on income inequality. Increasing purchasing power by raising the minimum wage among America's working poor is only a short term solution.
The name of the game is career mobility. I think Obama should focus on education and job training, particularly for lifetime minimum wage earners. He should give them the tools they need to excel onward within their career. From a global context, matching skills to the needs of our evolving labor market will increase American competitiveness and strengthen the economy. It has nothing to do with wages, and everything to do with core competencies. While Obama's efforts are well received, I think his strategy is somewhat incomplete without more attention job preparedness and education.

 

[Maedar]

Who sets the value of the work performed?

Yeah, who? The "job creators" who won't create jobs?

 

[Silver Soul]

Well, even Walmart acknowledges that they underpaid their workers by doing this.... having a food drive for their associates.

http://finance.yahoo.com/blogs/the-...---for-other-walmart-employees-191602622.html

 

[Blazekickblaziken]

I think minimum wage should stay as is. They're only going to raise the prices of everything else so it wouldn't be doing anything in the long run except create more inflation.

Yeah, I've never really bought this.

Where I work you start at 7.25 an hour. If they raised minimum wage $1 that means that to offset that cost they have to sell an additional $1 per person per hour. Using my store as an example, the average ticket comes to about $10 with 2 items, and 2 people can reasonably attend 40 people in an hour (maybe more) that means that to remake that money, on average your items would have to increase in price: about 2 or 3 cents (2 dollars, divided by 80 [40 tickets of two items]) Places like McDonalds and Wal-Mart can totally afford to rise their minimum wage without particularly affecting their prices.

I know that this isn't an exact representation of how pricing and income work, but I think it's a pretty good representation of how silly the concept of 'Raising minimum wage only raises inflation' is.

Adittionally I think something should be done about employers who hire more people than they actually need so that they can give each employee 20 hours max and not have to give them benefits.

 

[BigLutz]

Well, even Walmart acknowledges that they underpaid their workers by doing this.... having a food drive for their associates.

http://finance.yahoo.com/blogs/the-...---for-other-walmart-employees-191602622.html

Really? Because it seems like Wal Mart acknowledges something else from the article.

"“That store has set up a bin for associates to help out other associates,” he told Yahoo Finance. “These are people that have had some unforeseen hardship in the last year. Maybe their spouse lost a job, or they experienced the death of a loved one, or a natural disaster impacted their home; things you just can’t plan for. It’s a chance for associates to look out for and help each other.”"

Adittionally I think something should be done about employers who hire more people than they actually need so that they can give each employee 20 hours max and not have to give them benefits.

You know by doing that it helps alot of High School and College students who take a part time job either on the weekends or after class to get a little extra money. And honestly if the employee does not like it there, they are free to leave, enough people dont that and they will be forced to change.

 

[1rkhachatryan]

Honestly the problem with raising the wage is that the employers hold the employees to an even higher degree meaning you need to have more experience and more credentials to even get the job. This is the issue with the job market right now. Jobs where you really don't need any experience to work there, are requiring a lot of experience to even get the job.

Yes I know there are jobs where you actually need the experience to get it, but jobs like fast food restaurants and retail have absolutely no reason to be picky.

What's worse is that if you haven't had a job in the last year or two, you can't fins anything at all. This is where I am at the moment. My first and only job was back in 2008 and I decided to focus on school for the past 5 years because I just wanted to get it done. I've been job hunting for the past two years maybe?? And I've gotten maybe two interviews. And it's not like I've been applying to office jobs or anything, simple restaurant jobs and retail jobs won't even give you a chance.

 

[Blazekickblaziken]

You know by doing that it helps alot of High School and College students who take a part time job either on the weekends or after class to get a little extra money. And honestly if the employee does not like it there, they are free to leave, enough people dont that and they will be forced to change.

1) A good chunk of the people who work these part time jobs are college graduates. Not to mention that just because you're going to college doesn't mean that you're working for "extra money". This might be news to you, but not everyone is from a well off family, some people have to work to pay their college tuition. And 20 hours a week off of 7.25 and hour isn't something that's particularly helpful.

http://www.huffingtonpost.com/2013/03/31/college-graduates-minimum-wage-jobs_n_2989540.html

2) Not quitting a job that doesn't pay well or give enough hours is a choice in name only. You quit your part time job and odds are, you're going to be looking for employment for a loooooooong time. And you still have to pay rent, groceries, gas, and day-to-day living expenses, and you better not get sick in the mean time because that costs money too. If you think the solution to this problem is simply "Quit and find a better job" you are astoundingly out-of touch. If it is that difficult for ONE person to just quit a job, what makes you think that enough people will quit their jobs to make them change?

 

[Shiny Budew]

Honestly the problem with raising the wage is that the employers hold the employees to an even higher degree meaning you need to have more experience and more credentials to even get the job. This is the issue with the job market right now. Jobs where you really don't need any experience to work there, are requiring a lot of experience to even get the job.

This. And if you have a ton of experience but no college degree, you're in the same boat. It's absolutely ridiculous.

 

[BigLutz]

1) A good chunk of the people who work these part time jobs are college graduates. Not to mention that just because you're going to college doesn't mean that you're working for "extra money". This might be news to you, but not everyone is from a well off family, some people have to work to pay their college tuition. And 20 hours a week off of 7.25 and hour isn't something that's particularly helpful.

http://www.huffingtonpost.com/2013/03/31/college-graduates-minimum-wage-jobs_n_2989540.html

No it is not news for me I worked a twenty hour weekend job during colors to pay for my car and save for a trip to Japan while using the bevy of student loans available to me to pay for my college and housing like the vast majority of college students

2) Not quitting a job that doesn't pay well or give enough hours is a choice in name only. You quit your part time job and odds are, you're going to be looking for employment for a loooooooong time. And you still have to pay rent, groceries, gas, and day-to-day living expenses, and you better not get sick in the mean time because that costs money too. If you think the solution to this problem is simply "Quit and find a better job" you are astoundingly out-of touch. If it is that difficult for ONE person to just quit a job, what makes you think that enough people will quit their jobs to make them change?

I do think it is that simple if someone like myself doesn't like say the hours and minimum pay at say Sears they can quit and look at jobs say at Lowes which pays better, the same can be said about Wal Mart and Costco. Even with part time jobs the wages are not universal one only needs to shop and compare

 

[LDSman]

Costco also appeals to an entirely different group than wal mart. They sell stuff that costs more and are mainly in larger cities.

http://www.thedailybeast.com/articl...26/why-can-t-walmart-be-more-like-costco.html

What do you notice? Costco has a more highly paid labor force--but that labor force also brings in a lot more money. Costco's labor force, paid $19 an hour, brings in three times as much revenue as a Walmart workforce paid somewhere between 50-60% of that. (There's a bit of messiness to all these calculations, because of course both firms have employees who don't work in stores--but that's the majority of their workforce, so I'm going to assume that the differences come out in the wash.)

This is not because Costco treats its workers better, and therefore gets fantastic productivity out of them, though this is what you would think if you listened to very sincere union activists on NPR. Rather, it's because their business model is inherently higher-productivity. A typical Costco store has around 4,000 SKUs, most of which are stacked on pallets so that you can be your own stockboy. A Walmart has 140,000 SKUs, which have to be tediously sorted, replaced on shelves, reordered, delivered, and so forth. People tend to radically underestimate the costs imposed by complexity, because the management problems do not simply add up; they multiply.

http://www.chicagonow.com/windy-city-young-republicans/2013/07/costco-vs-walmart/

Costco's secret is that it explicitly avoids serving low income urban and rural areas where shoppers are less likely to make large weekly and monthly purchases that are at the heart of Costco's profitability quotient. By avoiding economically depressed areas altogether, Costco concentrates its resources on higher income communities that are not as susceptible to economic downturns and where shoppers spend excessively on consumer goods and groceries. Also, by avoiding low income areas, they reduce the number of jobs accessible to low income people who may have less work experience or educational achievements.

The bottom line translated into liberalese: Costco goes out of its way to cater to the top 20 percent of income earners and hires their children while avoiding the 80 percenters and their kids like the plague.

Costco beefs up profits by serving areas with massive quantities of disposable household income; then pays out a considerable amount to workers who are from those same upper income communities on the assumption that they are well-educated, experienced workers. They avoid the risk of opening in communities with lower disposable household income where revenues would not be as high and economic turbulence is constant. By avoiding those communities, they also avoid the risk of hiring less experienced, less educated workers who would be both expensive based on their skill set and hard to fire if they don't pan out since they are unionized.

 

[Silver Soul]

I shop at Costco and believe me, I get more stuff from there than other places since my family are members. Not to mention that their workers get more benefits.

And other thing, a manager at McDonald's in Garwood of my home state makes $8.25 per hour which is a dollar more than the current federal minimum wage. That pretty much kills the argument in how workers under the minimum wage should shut up and work hard to be promoted.

 

[BigLutz]

I shop at Costco and believe me, I get more stuff from there than other places since my family are members. Not to mention that their workers get more benefits.

And other thing, a manager at McDonald's in Garwood of my home state makes $8.25 per hour which is a dollar more than the current federal minimum wage. That pretty much kills the argument in how workers under the minimum wage should shut up and work hard to be promoted.

Again if workers hate it so much why do they still work there? They can easily shop around for another job, even one at another fast food restaurant that provides a better salary. If McDonnalds begins losing their staff enmass they will change their policy, its simple market economics.

 

[ellie]

Again if workers hate it so much why do they still work there? They can easily shop around for another job, even one at another fast food restaurant that provides a better salary. If McDonnalds begins losing their staff enmass they will change their policy, its simple market economics.

Where is this magical land you live where jobs are easy to find and plentiful? I started working where I work my junior year of college and I had been looking since I started. This was the first place I found that kept me as more than a seasonal. If someone needs money desperately they are probably going to take what they can get and maybe try to look for something better in the meantime. And if the workers quit, there will be 10 more to take their place because of how bad the economy is.