Michigan considers $10 minimum wage

[Alien Space Bats]

Minimum wage goes up, i put up my prices, I collect back the money i lost through the higher wage costs, through higher prices. Inflation rises further and the worker is not any better off.

It just costs the government money to implement.

There's one tiny problem with your theory: You assume that your customers are just going to go along with whatever price increase you decide to implement. But what if they don't?

<pause>

Because you know they don't have to, right? They can just tell you to go fuck off. And its not like they're going to stupidly say, "Oh, O.K...." when you explain that the ebil gubbermint has just jacked up your wages, and so you've got to raise your prices to maintain your profits. No, they're going to say, "That's your problem," because in fact your customers don't give a good God-damn about your profits; they just want to get the best deal they can.

So basically your stuck. You can't raise your prices, because your customers won't pay the added amount; that means the difference has to come out of your profits, and if you can't stay in business at your new, lower profit level, well then that's that. Otherwise, you just have to eat the loss and keep going,

Because remember, if you could raise prices without losing customers, then you'd have probably already done so even before the government raised the minimum wage; in fact, you'd be a damned fool if you hadn't. I mean, charging what the market will bear and pocketing the difference is what free market capitalism is all about.

[Alien Space Bats]

The answer isn't clear, and that's why policy-makers undertake a lot of preliminary research prior to implementation, a needs assessment being crucial, too. Unless the Michigan policy-makers are inept, these factors would have been taken into account and scrutinised thoroughly so that they could estimate the change in net welfare.

We're talking Republicans here. Ineptitude is a given.

[Patriqvinia]

Bolded: Then we're on the same page... except, you somehow got to the opposite conclusion.

Your video mentioned welfare in terms of producer and consumer surplus, which is insufficient in and of itself to analyse something like this. That's why we came to different conclusions.

Ah, so you disagree with the model because you think empirical evidence doesn't measure up (there are certainly things it doesn't account for, like minimum demand).

"For most industries the average wage increases with the minimum wage but the employment and hours response is attenuated. There is, however, a subset of industries for which there is an employment and hours response, and some of these responses are quite large. Such differential impact may have its origins in the technology, structure of work, consumer demand elasticities regulatory structures, or other factors."(The Effect of Legislated Minimum Wage Increases on Employment and Hours: A Dynamic Analysis)

Well, seeing as low-skilled jobs have an extremely high demand curve elasticity as implied by the low impact of immigrant workers on the wages of low-skilled native labor, it can be reasonably inferred that that is among the areas most devastated by price-floors on labor. But of course this simply follows the textbooks in that it is highly skilled labor which is the more inelastic.

And no, this is not without further empirical support.

Would you also happen to believe that downward nominal wage rigidity driven by market forces does not lead to a surplus of labor?

[New Chalcedon]

If it makes you feel better about yourself, sure. The evidence still says I'm right, but that's cool, because you don't really like evidence.

What about my experience as a director and wage setter?

What happened to the "free market"? I'm sure you're aware that neoclassical theory pretends that everyone has equal bargaining power, thus preventing the over-accumulation of surpluses by one group or another - and I'm also sure that you're aware that this whole "free market means freedom!" mantra is what the Right buys into so heavily in justifying their deregulations. By calling yourself a "wage setter" (i.e., someone who can set the price of a particular good irrespective of its actual value), you're acknowledging that the system is broken....and that you, personally, are exploiting that breakage for your personal gain.

People like you are - by your own admission - why the market should be regulated.

[Luveria]

seems too high for a minimum wage price IMO

Are you aware Canada has higher minimum wages and is doing just fine?

[Distruzio]

:palm:

If $10 seems reasonable, why stop there? Why don't they raise minimum wages to $1000/hr. Then folks could afford things, right?

/end sarcasm

If minimum wage is bad, why is Australia better than America under every metric available?

To give Aussies a much deserved sense of superiority.

[Luveria]

:palm:

If $10 seems reasonable, why stop there? Why don't they raise minimum wages to $1000/hr. Then folks could afford things, right?

/end sarcasm

Do you have a problem with there being any minimum wage at all?

[Freiheit Reich]

Good, it will drive more jobs away. I would be happy if the blue states lose more jobs thanks to failed liberal policies. Maybe one day liberals will wake up.

Michigan vs. Texas; Rhode Island vs. Oklahoma; Ohio vs. North Dakota. Who has the better economy?

The Great Plains states usually have lower unemployment rates. Why is this? I am not a conservative but it does seem conservatives have better policies on business which is why economies in their states usually are better.

Let Michigan lose more jobs, I wasn't moving there anyways, chances are I will move to a red state and this might help me out. Texas will welcome them.

[Greed and Death]

Minimum wage goes up, i put up my prices, I collect back the money i lost through the higher wage costs, through higher prices. Inflation rises further and the worker is not any better off.

It just costs the government money to implement.

There's one tiny problem with your theory: You assume that your customers are just going to go along with whatever price increase you decide to implement. But what if they don't?

<pause>

Because you know they don't have to, right? They can just tell you to go fuck off. And its not like they're going to stupidly say, "Oh, O.K...." when you explain that the ebil gubbermint has just jacked up your wages, and so you've got to raise your prices to maintain your profits. No, they're going to say, "That's your problem," because in fact your customers don't give a good God-damn about your profits; they just want to get the best deal they can.

So basically your stuck. You can't raise your prices, because your customers won't pay the added amount; that means the difference has to come out of your profits, and if you can't stay in business at your new, lower profit level, well then that's that. Otherwise, you just have to eat the loss and keep going,

Because remember, if you could raise prices without losing customers, then you'd have probably already done so even before the government raised the minimum wage; in fact, you'd be a damned fool if you hadn't. I mean, charging what the market will bear and pocketing the difference is what free market capitalism is all about.

I know people are so capable of foregoing food and clothing.

[New Chalcedon]

There's one tiny problem with your theory: You assume that your customers are just going to go along with whatever price increase you decide to implement. But what if they don't?

<pause>

Because you know they don't have to, right? They can just tell you to go fuck off. And its not like they're going to stupidly say, "Oh, O.K...." when you explain that the ebil gubbermint has just jacked up your wages, and so you've got to raise your prices to maintain your profits. No, they're going to say, "That's your problem," because in fact your customers don't give a good God-damn about your profits; they just want to get the best deal they can.

So basically your stuck. You can't raise your prices, because your customers won't pay the added amount; that means the difference has to come out of your profits, and if you can't stay in business at your new, lower profit level, well then that's that. Otherwise, you just have to eat the loss and keep going,

Because remember, if you could raise prices without losing customers, then you'd have probably already done so even before the government raised the minimum wage; in fact, you'd be a damned fool if you hadn't. I mean, charging what the market will bear and pocketing the difference is what free market capitalism is all about.

I know people are so capable of foregoing food and clothing.

I know that there's no such thing as competition.

[The Whispers]

This due to stagnant wage rates for at lest the ten years after whilst inflation keeps rising.

Do you not know that the minimum wage has risen significantly since 1999?

It started out at £3.60 and is now £6.19. That's a 72% increase over 13 years.




By all means, though, carry on explaining how it has fucked the public, with your massive breadth and depth of management expertise and sociological knowledge.

[The Joseon Dynasty]

Everything you're arguing is predicated on the the wage elasticity of low-skilled labour demand, which, in the United States. is estimated at 0.1 - 0.5, from what few sources I could dig up. To put this in perspective, a 30% wage increase will see between a 3% to 15% decrease in labour demanded. I don't know much about the American economy, so I'll take your word for it that firms in Michican are on the upper end of that range. So, we have to ask, is having less people on a more liveable wage better than having more people on a less liveable wage? The answer isn't clear, and that's why policy-makers undertake a lot of preliminary research prior to implementation, a needs assessment being crucial, too. Unless the Michigan policy-makers are inept, these factors would have been taken into account and scrutinised thoroughly so that they could estimate the change in net welfare.

I would say the market sets a livable wage as it is where Demand most efficiently meets supply if there is no government intervention. If i don't offer enough pay the interviewee will not take the offer of the job, if i offer too much i get over supply. I would argue government intervention leads to a glut in supply, I may look for more automation instead of labour for long term cost savings. This leads me to believe that whilst there is little effect on the employment levels of the skilled, unskilled labour now looks much more expensive. For this reason i feel a minimum wage level harms the lowest payed and the unskilled disproportionaly among the unemployed as it makes the employment of skilled labour more attractive. Thus leaving the poorest and the minorities stuck in "ghettos" they are trapped in and thus stopping the unskilled from gaining the first rung of the ladder. It creates a more unequal society and not less.

That isn't always the case. Where the free market nestles into equilibrium is theoretically economically efficient. But economic efficiency has a very particular definition, as the point where no one person can be made better off without made at least one other person worse off. In other words, it brings us to the point where total welfare is maximised. But that's all it says. It doesn't imply anything about the distribution of welfare, or whether it is equitable, fair or "good". That's why there is government intervention. If the supply of labour is high enough, which it will be in a recession when jobs are scarce, firms are capable of setting a lower wage and maximising their profits through cheap input costs. This means that producer welfare will be relatively higher than consumer welfare, and while that equilibrium might be efficient, it is by no means "good", and intervening to force producers to raise their wages will redistribute welfare in a more equitable way. That's the principle behind it.

You bring up some fair points, though; that a higher wage for low skilled workers could lower the opportunity cost of purchasing higher skilled workers. It certainly could, but it doesn't seem as though studies on the impact of minimum wage hikes have identified something like that occurring.

[Alien Space Bats]

I know people are so capable of foregoing food and clothing.

... Or they could switch from Walmart (which would be adversely affected by such a change in the minimum wage, and thus might be tempted to try and recapture the lost profits through an unjustified price increase) to Costco (which would not, given that it already pays more than the minimum). You see, that's the flaw in the idea that businesses can just dictate prices on a "cost plus" basis: There's always some damned maverick out there who won't play ball.

Ain't competition grand?

[Forster Keys]

If minimum wage is bad, why is Australia better than America under every metric available?

To give Aussies a much deserved sense of superiority.

Aw shucks.

[Kanery]

If it is passed, it should give some very nice insight into how well communities do or do not fare in higher minimum wage areas.

[New England and The Maritimes]

If it is passed, it should give some very nice insight into how well communities do or do not fare in higher minimum wage areas.

The research has already been displayed in this thread. Raising the minimum wage generally reduces unemployment and brings up living standards.

[Rosov]

I think this will cause just as many problems as it solves.

[That 0ne Place]

.

[That 0ne Place]

.

[Sibirsky]

Press the fucking button

[Sibirsky]

If it is passed, it should give some very nice insight into how well communities do or do not fare in higher minimum wage areas.

The research has already been displayed in this thread. Raising the minimum wage generally reduces unemployment and brings up living standards.

Where is this research?

[Varijnland]

Not bad considering in the UK it's:
for workers aged 21 years or more: £6.19 per hour
for workers aged 18 to 20 inclusive: £4.98 per hour
for workers aged under 18 (but above compulsory school age): £3.68 per hour
for apprentices aged under 19: £2.65 per hour
for apprentices aged 19 and over, but in the first year of their apprenticeship: £2.65 per hour

[New England and The Maritimes]

The research has already been displayed in this thread. Raising the minimum wage generally reduces unemployment and brings up living standards.

Where is this research?

CTOAN posted it not that long ago. Comparison studies that have yet to be contradicted in the field.

[That 0ne Place]

obviously caps are necessary if i wish to rant

[Mavorpen]

obviously caps are necessary if i wish to rant

Obviously punting small children is necessary if I wish to express my anger.