Yes, that headline is just an attention getter. Neither party actually intends to be racist or discriminatory but raising the minimum wage has the unintended concequence of causing primarily women and blacks to lose their jobs.
How you ask? Simple neoclassical economics of course. Raising the minimum wage increases the price for labor. Increasing the price for labor will decrease the current amount of labor employed and also increase the demand for labor. Basically, people get fired because the labor is too expensive and more people are seeking jobs now that the new minimum wage is at an attractive level.
Minimum wage polices are discriminatory because, generally, women and blacks are last hired first fired. Now before you label me as a racist, I gained this knowledge at WTAMU. As with anything I learn I do question it, but this premise seems fair given current societal norms. If anyone has any facts otherwise please post them.
The left will argue that the supply and demand curves are inelastic and a change in price will have little effect on the market. Basically this means only a few people will be fired and the greater good will have been served.
This notion is foolish. First of all, the job markets are not the same across the nation. The supply curve could be inelastic in some areas while very elastic in others and elasticity can even vary from company to company. Given this, minimum wage increases wil have little or no effects in places like San Francisco where the minimum wage is far above what anyone in the federal government wants to increase it to and other places with already low unemployment will suffer greatly depending on the amount of the increase.
Other problems with the minimum wage increases would be that it encourages outsourcing, offshoring, and replacing workers with machines. Also, raising the min wage will still have minimum wage earners beloe poverty. Consider the proposed 7.25 an hour would only gross 14.5k a year. This is a good argument for a living wage, but elasticity wouldn’t matter and mass unemployment would occur.
Unfortunately with situations like these we will only have to wait for time to tell to see who is right and who is wrong. I would prefer to be cautious, but with pandering rwpublicans on the house it looks like we are going to choke this stuff down and see what happens. If unemployment increases after the law is enacted, without pther controls in place, then that is proof min wage increases are a bad idea.
I am fully open to the idea that I could eat my words. America has done just fine with a minimum wage and it very well could continue to do so.
The worst part about these situations is that both party’s last interests are the people. Both sides are simply pandering for votes and are ignoring long term concequnces.
If anyone is wondering about pandering claims, note that many unions have their hourly wage tied in with the minimum wage. This means that if the min wage increases so does the union’s. Unions have considerable political power as well, primarily for democrats, which is why they are the biggest proponents for a min wage increase. What seems odd to me is why Republicans would want to pander to the unions when, chances are, there is no possible way the unions will endorse the GOP. I bet their motives have something to do with the tax cuts for corporations mixed in with the bill.
My solution is to not increase the minimum wage and let the local governments enforce their own minimum wage laws. Local governments can better manage their job markets and account for whatever elasticity that market might have as opposed to the federal minimum wage throwing everything out of whack.
Tags: econimics, minimum wage, taxes
If minimun wage is increased these business will just hire an illegal and pay under the table anyway.
Then, they should go to jail.
Did the last minimum wage throw Amarillo out of whack?
Nope, in those eight years we’ve added a helicopter plant, countless places to eat, new hotels, new retailers, etc. The most evident growth I’ve seen in my short lifetime. The lower and middle clases spend all of their income and save little. That stimulates the hell out of the economy. If our state legislature is too lazy to give the people a raise when they give themselves raises all the time, I applaud any lawmakers who vote to raise the federal minimum wage. The people deserve it. Productivity in all sectors has grown exponentially. American workers have embraced technology and learned the new skills to be competitive in the world economy. We the people need an increase and we deserve it.
Clint, once again thanks for taking the time to post.
I would respond and had written something up but I am deciding not to post it because I don’t mind having an opposing opinion out there about the topic.
Minumum wage affects a very small portion of the labor force and most likely, under any circumstances, has no concequence to anyone who posts here.
If anything I would like to reiterate and see if we can both agree that both parties do not have the best interest of the people in mind with the passing for this law. Is that a fair statement? I will recognize that the GOP does not have the people’s interest in mind by passing increases, they are just looking to get rid of the estate tax.
The minimum wage affects anyone who works.
Anyone who helps pass an increase is helping working Americans.
The minimum wage affects anyone who works.
Anyone who helps pass an increase is helping working Americans.
I suppose that’s true if you define “anyone who works” and “working Americans” as union members whose pay increases are tied to the minimum wage. But for us poor stiffs who’ve who’ve relied on our own ambition and drive to get ahead*, an increase in the minimum wage means little or nothing. (*In the spirit of full disclosure, I admit I was a member of the Musician’s Union briefly in the late ’60’s/early 70’s, mainly because there were clubs in the Capital District of upstate New York that were “closed shops,” but not because I thought that the union could do anything for me I couldn’t do myself.)
We discussed this topic ad nauseum at that other blog, so I’m going to limit myself to two new comments that are germane to current events:
1) If our other friends were participating in this thread, they would point out that Bo’s professor at WTAMU must obviously be bought and paid for by some right-wing cabal of evil capitalists who want to keep down the downtrodden proletariat.
2) I find it interesting that the Republicans are offering a $2.10 increase in the minimum wage, tied to a decrease in the estate tax, and that at least some Democrats are refusing to support it because of the “poison pill” of “tax breaks for the rich.”
Paraphasing Golda Meir’s comment that the conflict in the Middle East will never be resolved until the Muslims love their children more than they hate the Jews, it looks like the minimum wage will never be increased until the Democrats love the working poor more than they hate the rich.
Well the handouts to the rich have been too great. Thats the last thing America needs. Ben Stein and other conservative economists have said as much. They don’t get much more fiscally conservative than Ben.
It is mighty shifty to basically kill something the people do want by attaching it to what the people don’t want. That’s what I’ve come to expect from these clowns, though.
Minimum wage is a people’s issue, not a union issue. In case you haven’t noticed, the unions are dying a slow painful death. Their disease? Unchecked corporate power, outsourcing and I’ll even admit internal corruption. Basically I’m saying unions don’t have the legislative pull or lobbying muscle they once did.
It is mighty shifty to basically kill something the people do want by attaching it to what the people don’t want.
It’s called compromise, Clint.
BTW, who are “the people”? The same young person on minimum wage today who would get a pay raise may have a large enough estate later in life to want to pass it on to his (or her) heirs without the government decimating it. Unlike other societies, Americans’ economic station in life isn’t static. Minimum wage is only the first rung on the ladder.
Why do you liberals hate the rich more than you love the working poor? You’re cutting off your nose to spite your face.
Well the handouts to the rich have been too great.
This presupposes that all wealth belongs to the government, which has the right to give it back to the people as it sees fit.
Allowing someone to keep more of what they’ve earned isn’t a handout. A handout is giving money to someone who hasn’t earned it (unless they’re incapable of doing so – disabled, temporarily unemployed, etc.).
I got to agree with Clint on this one, to an extent anyway. I’m getting together a post with more detail covering some of these subjects you guys have been discussing.
Anyway I think that for people who do most service type jobs, fast food, jobs as maids in motels etc. Jobs that face it, are going no where, should get a minimum wage and it should be tied to inflation. I will elaborate more later.
However jobs with a future, people training as auto mechanics, plumbers, electricians etc. Should be on some type of sliding scale. I started life training as a mechanic. I know how much money a screwup can cost a company. The company should be able to pay less during the initial training period.
More later
The company should be able to pay less during the initial training period. -celtic
Yeah, sure… 90 days, (even a year if you’re learning a trade from the ground up or something) depending on the job and controlled by the employer.
I did internships for experience, so I know someone who is starting out has to make sacrifices for benefit in the long run. I also got a job in a production lab right after my last internship. I was SO happy. (This was about a month before the min wage legislation passed.) When the boss said, “looks like the minimum wage is being raised, guess I’ll just start you out at $5.15″ I was walking on air!
I don’t think I really had a point there, but oh well.
I guess I just wanted to show that minimum wage increases help people along their way.
Another time: The story of the $82 car insurance bill and the $76 check.